PRO-7 Issue Date April 22, 2002 Conflict of Interest Purpose/Summary Personal interests of employees must not influence or appear to influence company transactions. This procedure provides the requirements for disclosing potential conflicts of interest and the process for obtaining a conflict of interest review. This procedure applies to all Boeing employees and Boeing subsidiaries. Supersedes November 19, 2001 Applies to All Boeing Maintained by Vice President of Ethics and Business Conduct Authority Reference(s) Policy POL-2, "Ethical Business Conduct" Approved by Gale C. Andrews Vice President of Ethics and Business Conduct Summary of Changes to the Title Page The Issue Date, Purpose/Summary, and Supersedes date have changed. Page 1 of 6
1. Introduction To assist employees in identifying conflicts of interest, this procedure defines the requirements for a process to be established to review issues regarding conflicts of interest, to determine whether a conflict of interest exists, and to interpret, administer, and resolve matters pertaining to this procedure. The review process will be administered by designated ethics advisors for each Business Unit. 2. Requirements A conflict of interest may exist when an employee is involved in an activity or has a personal interest that might interfere with the employee's objectivity in performing company duties and responsibilities. Therefore, any such activity or personal interest, including those of the employee's immediate family, is prohibited unless formally approved in writing. Such activities include outside employment in areas similar to those in which The Boeing Company is involved; outside work for customers, suppliers, vendors, or competitors of Boeing; other activities that have the potential to affect the employee's objectivity; and activities that could reflect negatively on the reputation of Boeing and its employees. Holding a financial interest in a business concern that is a supplier, customer, partner, subcontractor, or competitor of the company constitutes a conflict of interest under certain conditions. Company transactions with other business entities must not be influenced by the personal interests or activities of its employees. Such conflicts may appear as favoritism or otherwise damage the reputation of the company or its employees. An actual conflict of interest need not be present to constitute a violation of this procedure. Activities that create the appearance of a conflict of interest also must be avoided in order not to reflect negatively on the reputation of Boeing and its employees. 3. Responsibilities A. Activities Requiring Full Disclosure An employee is required to fully disclose, through the Conflict of Interest Review Process, any of the following conditions. (If possible, such disclosure should take place before the employee or an immediate family member undertakes the following conduct. However, disclosure is still required if the following conditions exist or have existed during the prior year.) 1. Investing in any supplier, customer or competitor under the following conditions: a. Financial interest in any supplier, customer or competitor where the Boeing employee can influence contracts, processes, products of the supplier or where the Boeing Page 2 of 6
employee can influence Boeing business decisions with respect to that entity. b. Financial interest in any supplier, customer or competitor if the holding is either five percent (5%) or more of the stock, assets or other interests of the supplier, customer or competitor; or ten percent (10%) or more of the employee s net assets. 2. Acting as an employee, officer, director, partner, consultant, representative, agent, or advisor, of any of the following: a. A supplier, customer, partner, subcontractor, or competitor of Boeing. b. Any business that is involved in technical areas or product lines that are similar to those of Boeing. c. Any business whose customers include Boeing, its customers, or its suppliers. 3. Acting as a consultant, advisor, or expert witness in a legal process, such as a lawsuit, administrative proceeding, mediation, arbitration, dispute resolution, government or private investigation, rule-making procedure or similar process. 4. Engaging in any activity that could create the appearance of a conflict of interest, and thereby impair the reputation of The Boeing Company for impartiality and fair dealing. Examples of such activities include: a. Having any financial involvement with an employee or representative of a supplier, vendor, customer, partner, subcontractor, or competitor of Boeing with whom the employee regularly comes in contact while performing company business. b. Participating in any activity that might lead to or give the appearance of unapproved disclosures of Boeing proprietary information or proprietary information owned by others who have entrusted such information to Boeing. c. Dealing directly, in the course of normal company responsibilities, with a spouse or immediate family member who is employed by a supplier, vendor, customer, or competitor of Boeing. B. Activities That Do Not Require Disclosure Page 3 of 6
1. Working for any entity which is not a supplier, customer, competitor, partner or subcontractor to Boeing, and is not involved in any technical areas or product lines that are similar to those of Boeing. 2. Participation, at the request of the company, in nonprofit industrial, professional, civic or charitable activities (such as United Way or AIA). Note: Employees may run legal risks in participating in such activities. To determine whether Boeing indemnification of an employee against such risks is available, the employee should contact the corporate secretary. 3. Certain passive investment interests such as owning government securities or having a checking or savings account with a financial institution. C. Disclosure Requirements and Responsibilities 1. When a conflict of interest determination is required by this procedure or when an employee would like a determination, the employee should contact their local business ethics advisor for guidance. Employees will cooperate fully in the review process by providing all necessary information. Ethics advisors may need to contact management and/or the Law Department during the determination process. 2. Targeted Risk Areas will be determined by the Office of Ethics and Business Conduct and coordinated with affected Process Councils and Business Units. Targeted Risk Areas include senior executive management and job functions that have significant contact with customers, suppliers, partners, vendors, competitors and other stakeholders. Employees working in these areas are required to complete an annual conflict of interest questionnaire. Where employees respond affirmatively to any question in the questionnaire, a request for conflict of interest determination is required. 3. Conflict of interest determination requests by senior executive management will be coordinated through the Vice President of Ethics and Business Conduct with final approval by the Chief Executive Officer. 4. Requests for a conflict of interest determination will be reviewed on a case-by-case basis through the established conflict of interest review process. The employee should submit, in writing, a request for a Conflict of Interest Review from their designated ethics advisor. The request should include the following information: Page 4 of 6
a. A description of the employee's duties and responsibilities with Boeing. b. A description, in general terms, of the proposed outside activities to be performed by the employee, including the name, product lines, and market of the outside company or business in which the employee proposes to become involved. c. A description of the relationship of the outside company or business to Boeing, if any (for example, supplier, customer, similar products or customers, competitor). d. The proposed level of the employee's involvement in, or proposed position to be held with, the outside company or business (for example, owner, employee, representative, consultant, advisor). The ethics advisor making the review may request a recommendation, evaluation, or concurrence from the appropriate level (or levels) of management and may request additional information from others to assist in making a decision. 5. Once a written determination has been made, it continues in effect until the employee s termination from Boeing or the determination is modified or withdrawn by the designated ethics advisor. When changed circumstances or new developments occur, the employee is responsible for informing the local ethics advisor of the change. Upon review, the previous decision may be reversed, modified, or withdrawn. 6. Records of conflict of interest reviews will be retained in centralized ethics records. Copies will be provided to the employee and, upon request, to the Vice President of Ethics and Business Conduct. 7. An employee may appeal the determination of a conflict of interest review by the operating group or division, or pose questions, directly to the group executive ethics advisor. 8. Questions that may arise about matters relating to this procedure should be addressed to the local business ethics advisor. D. Additional Guidance for Other Potential Conflicts of Interest 1. Conflict of interest laws and regulations applicable to current and former U.S. Government employees, including special Government employees, are set forth in Boeing Procedure PRO-11, Former U.S. Government Employees - Conflict of Interest. Page 5 of 6
2. Organizational conflicts of interest may arise when an employee is asked to serve on a government panel or for government agencies when the panel or agency is involved in reviewing Boeing proposals or activities. The Contracts organization in the division or business unit can provide guidance and resolution. 3. Additional conflict of interest requirements pertaining to consultants are outlined in Boeing Procedure PRO-13, Consultant Agreements. 4. Responsibilities of management regarding the hiring and placement of employees' relatives in the workplace are described in Boeing Procedure PRO-58, Employment of Relatives. 5. Retired Boeing executives must obtain approval from the Boeing Retirement Committee when they decide to engage in any activity that may be in competition with any significant aspect of the company's business. The Boeing Retirement Office can provide guidance. Page 6 of 6