`
`
`
`CONSTRUCTION AND GENERAL
`BUILDING LABORERS’ LOCAL
`UNION NO. 79 GENERAL FUND and
`CLEVELAND BAKERS AND
`TEAMSTERS PENSION FUND,
`
`Plaintiffs,
`
`v.
`
`
`
` C.A. No.
`
`
`
`
`
`
`
`
`IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`
`:
`:
`:
`:
`:
`:
`:
`:
`:
`:
`JAMES F. ALBAUGH; ROBERT A.
`:
`BRADWAY; DAVID L. CALHOUN;
`:
`ARTHUR D. COLLINS, JR.;
`:
`RAYMOND L. CONNER; LINDA
`:
`COOK; KENNETH M. DUBERSTEIN;
`:
`SCOTT FANCHER; EDMUND P.
`:
`GIAMBASTIANI, JR.; LYNN J.
`:
`GOOD; GREG HYSLOP; LAWRENCE
`:
`W. KELLNER; CAROLINE B.
`:
`KENNEDY; EDWARD M. LIDDY;
`:
`KEVIN J. McALLISTER; WALTER
`:
`JAMES McNERNEY, JR.; DENNIS A.
`:
`MUILENBURG; SUSAN C.
`:
`SCHWAB; GREG SMITH; RONALD
`:
`A. WILLIAMS; and MIKE S.
`:
`ZAFIROVSKI;
`:
`:
`:
`:
`:
`:
`:
`:
`:
`:
`
`
`VERIFIED COMPLAINT FOR BREACH OF FIDUCIARY DUTY
`
`Defendants,
`
`and
`
`THE BOEING COMPANY, a Delaware
`Corporation,
`
`
`
`
`
`Nominal Defendant.
`
`
`
`
`
`
`
`
`
`PUBLIC INSPECTION VERSION
`FILED JUNE 24, 2020
`
`2020-0466-AGB
`
`EFiled: Jun 24 2020 10:54AM EDT
`Transaction ID 65702202
`Case No. 2020-0466-AGB
`
`
`
`
`
`
`
`
`
`
`
`Acronym
`AC
`AEG
`AIB
`AOA
`AP
`AR
`ASRS
`B/U
`BCA
`BCA or BCAG
`CAPP
`CBT
`CG
`CPE
`DER
`DFDR
`E-Cab
`EASA
`ETOPS
`FAA
`FC
`FCC
`FCOM
`FCTR
`FHA
`FSB
`JATR
`M-Cab
`MCAS
`NTSB
`NTSC
`ODA
`OMB
`PCU
`PRI
`PSEU
`RCAS
`S&C
`SCE
`SMS
`SSA
`STS
`
`ACRONYM LIST
`Meaning
`Advisory Circular
`Airplane Evaluation Group (FAA)
`Accident Investigation Bureau (Ethiopia)
`Angle of Attack
`Autopilot
`Authorized Representative
`Aviation Safety Reporting System
`Backup
`Boeing Commercial Airplanes
`Boeing Commercial Aircraft Group
`Committee on Airplane Policies and Processes
`Computer Based Training
`Center of Gravity
`Chief Program Engineer
`Designated Engineering Representative
`Digital Flight Data Recorder
`Engineering flight simulator
`European Union Aviation Safety Agency
`Extended-range Twin-engine Operational Performance Standards
`Federal Aviation Administration
`Flight Controls
`Flight Control Computer
`Flight Crew Operations Manual
`Flight Control Test Rig
`Functional Hazard Assessments
`Flight Standardization Board
`Joint Authorities Technical Review
`Multi-purpose/Multi-model flight simulator
`Maneuvering Characteristics Augmentation System
`National Transportation Safety Board
`National Transportation Safety Committee (Indonesia)
`Organization Designation Authorization
`Operations Manual Bulletin
`Power Control Unit
`Primary
`Proximity Switch Electrical Unit
`Roll Command Alerting System or Roll Crew Alerting System
`Stability & Control
`Spoiler Control Electronics
`Safety Management System
`Systems Safety Analysis
`Speed Trim System
`
`
`
`
`
`
`
`
`
`Plaintiffs Construction and General Building Laborers’ Local Union No. 79
`
`General Fund (“Local 79”) and Cleveland Bakers and Teamsters Pension Fund
`
`(“Cleveland Bakers”) (collectively “Plaintiffs”), by and through their undersigned
`
`counsel, respectfully submit this Verified Complaint for Breach of Fiduciary Duty
`
`against the defendants named herein on behalf of The Boeing Company (“Boeing”
`
`or the “Company”). The allegations herein are made upon knowledge as to Plaintiffs
`
`and their own actions and, as to all other matters, upon information and belief gained
`
`from, inter alia, counsel’s review of Boeing’s public filings, press releases, and other
`
`official statements; congressional testimony and reports; other publicly available
`
`sources, including newspaper articles and reports of foreign governments;
`
`investigation undertaken by Plaintiffs’ counsel; and counsel’s review of internal
`
`Boeing documents Plaintiffs obtained following a demand and subsequent trial (by
`
`Local 79) for Boeing’s books and records pursuant to 8 Del. C. § 220 (the “Section
`
`220 Production”).
`
`NATURE OF THE ACTION
`
`1.
`
`This stockholder derivative action is brought on behalf of nominal
`
`defendant Boeing, alleging breaches of fiduciary duty by the Company’s board of
`
`directors (the “Board”) and senior executives in connection with the development
`
`and certification of Boeing’s 737 MAX aircraft, which led to two fatal crashes killing
`
`346 people, and the subsequent grounding of all 737 MAX aircraft.
`
`
`
`
`
`
`
`
`
`
`
`
`
`2.
`
`For years, the Board and Boeing’s senior management put profits and
`
`cost-cutting ahead of safety, choosing to cut corners, avoid regulatory scrutiny, and
`
`rush the 737 MAX to market, concealing critical safety flaws from both the Federal
`
`Aviation Association (“FAA”) and airlines in the process.
`
`3.
`
`Designing and certifying safe aircraft are vital to Boeing’s business.
`
`Likewise, ensuring the safe operation of Boeing aircraft by adequately training pilots
`
`is a necessary part of this business. These fundamental issues should have been
`
`acute considerations in the Company’s risk assessment and management. Indeed, as
`
`the world’s largest aerospace company, Boeing earned more than 60 percent of its
`
`total revenues from commercial aircraft sales, with revenues from the 737 MAX
`
`expected to account for more than 40 percent of the Company’s profits in 2019 alone.
`
`4. When two of Boeing’s 737 MAX airplanes crashed in October 2018
`
`and April 2019, killing all 346 people aboard both planes, it was quickly reported in
`
`various news publications that both of these crashes had resulted from the pilots
`
`fighting against a new computer system designed to control the new 737 MAX
`
`aerodynamics – the Maneuvering Characteristics Augmentation System (“MCAS”).
`
`These reports prompted Plaintiffs to examine Boeing and its Board’s oversight of
`
`commercial aircraft safety.
`
`4814-1573-3440, v. 1
`
`2
`
`
`
`
`
`
`
`
`
`5.
`
`As described below, this examination revealed serious problems and
`
`pervasive safety deficiencies concerning the 737 MAX, including: (i) the rushed
`
`development and production of the 737 MAX; (ii) the deployment MCAS to alter
`
`the flight characteristics of the 737 Max in an effort to evade additional FAA
`
`certification and/or flight simulator training requirements; (iii) Boeing’s conscious
`
`decision not to support MCAS with the information available from the redundant
`
`Angle-of-Attack (“AOA”) sensor or other more reliable and/or redundant inputs;
`
`(iv) Boeing’s concealment of MCAS from regulators, airlines, and pilots;
`
`(v) Boeing’s failure to include cockpit warning lights respecting MCAS (and/or an
`
`“AOA Disagree” alert) as a standard feature; (vi) Boeing’s concealment of the fact
`
`that the “AOA Disagree” alert, which was a certification requirement for the 737
`
`MAX, was inoperable in the vast majority of 737 MAX aircraft; (vii) Boeing’s
`
`misleading and/or incomplete disclosures made to obtain 737 MAX certification;
`
`(viii) Boeing’s corporate culture, which incentivized employees to put profits and
`
`cost-cutting ahead of safety; and (ix) the utter failure of Boeing’s Board to
`
`meaningfully oversee aircraft safety within its Boeing Commercial Aircraft group.
`
`6.
`
`As described below, Boeing’s failure to safely design the 737 MAX and
`
`to properly train pilots on how to fly it, lead directly to both the October 2018 and
`
`March 2019 crashes. As a result of the two crashes, on March 13, 2019, after several
`
`countries had already grounded the plane on their own, Boeing announced the
`
`4814-1573-3440, v. 1
`
`3
`
`
`
`
`
`
`
`
`
`worldwide grounding of Boeing’s 737 MAX. On April 3, 2019, Boeing’s then-Chief
`
`Executive Officer, Dennis Muilenburg, acknowledged Boeing’s fault for the 737
`
`MAX crashes and that the Company breached the “trust and confidence from [its]
`
`airline customers.”
`
`7. More than a year later, the plane is still not certified to return to flight.
`
`The fallout from these crashes has caused Boeing to lose enormously both in terms
`
`of its credibility and its stock price. Boeing has lost billions of dollars with losses
`
`still mounting. The human toll of these crashes is more devastating: hundreds of
`
`families have lost their fathers, mothers, sons and daughters as a result of Boeing’s
`
`failure to prioritize the safety of the passengers, pilots and staff of these two planes
`
`and of everyone who flew on a 737 MAX before March 2019.
`
`8.
`
`This shareholder derivative seeks action to recover for these losses by
`
`holding Boeing’s officers and directors responsible for failing to oversee the safe
`
`development, certification and production of the 737 MAX.
`
`THE PARTIES
`
`I.
`
`PLAINTIFFS
`
`9.
`
`Plaintiff Local 79 is the investment fund that allows Construction and
`
`General Building Laborers’ Local 79, a union serving workers in the five boroughs
`
`of New York City, to provide its members with retirement and other benefits. The
`
`union was created in 1996 and currently has over 10,000 active and retired members.
`
`4814-1573-3440, v. 1
`
`4
`
`
`
`
`
`
`
`
`
`1
`
`
`
`10. Plaintiff Cleveland Bakers is the pension fund that benefits members of
`
`Bakers’ Union Local No. 19 and Teamsters Local Union No. 507. These unions
`
`serve members in the Greater Cleveland Area.
`
`
`
`
`
`II.
`
`NOMINAL DEFENDANT
`
`11. Nominal defendant Boeing describes itself as the world’s largest
`
`aerospace company, and as the world’s leading manufacturer of commercial jetliners
`
`and defense, space, and security systems, as well as the leading service provider of
`
`aftermarket support. Boeing was incorporated in Delaware in 1934 and has since
`
`remained a Delaware corporation. It maintains its corporate headquarters in
`
`Chicago, Illinois. Boeing’s shares trade on the New York Stock Exchange under the
`
`ticker symbol “BA.”
`
`12. Boeing has historically reported revenue in four segments: (i) Boeing
`
`Commercial Airplanes (“BCA”); (ii) Boeing Defense, Space & Security (“BDS”);
`
`
`1 For purposes of this Complaint, the Relevant Period spans from January 2010 until
`the Present.
`
`4814-1573-3440, v. 1
`
`5
`
`
`
`
`
`
`
`
`
`(iii) Boeing Global Services (“BGS”); and (iv) Boeing Capital (“BCC”).2 BCA
`
`develops, produces, and markets commercial jet aircraft (including the 737 MAX)
`
`and provides fleet support services. BDS is engaged in the research, development,
`
`and production of manned and unmanned military aircraft, primarily for the United
`
`States Department of Defense. BGS provides services to Boeing’s commercial and
`
`defense customers. Finally, BCC provides financing to Boeing customers.
`
`13. Boeing generated more than $101 billion in revenue in 2018, with over
`
`60% (approximately $60.7 billion) of this amount attributed to BCA.3
`
`III.
`
`CURRENT DIRECTOR DEFENDANTS
`
`14. Defendant Robert A. Bradway (“Bradway”) has served as a Boeing
`
`director since 2016, and has served on the Board’s Audit Committee since 2017.
`
`From 2016 to 2019, Boeing paid Bradway the following compensation:
`
`
`Year
`
`2016
`2017
`2018
`
`
`Fees Earned
`or Paid in
`Cash4
`$0
`$163,060
`$135,000
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$0
`$215,615
`$180,000
`
`$30,000
`$31,000
`$31,000
`
`$30,000
`$409,675
`$346,000
`
`
`2 The Boeing Company, Annual Report at 1 (Form 10-K) (Feb. 8, 2019) (hereinafter
`“2018 Annual Report”).
`
`3 Id. at 19.
`
`4 Per Boeing’s proxy statements, “Reflects total cash compensation paid in [each
`year] and includes amounts deferred at the director’s election pursuant to our
`Deferred Compensation Plan for Directors.”
`
`4814-1573-3440, v. 1
`
`6
`
`
`
`
`
`
`
`
`
`2019
`TOTAL
`
`$135,000
`$433,060
`
`$201,111
`$596,726
`
`$17,500
`$109,500
`
`$353,611
`$1,139,286
`
`15. Defendant David L. Calhoun (“Calhoun”) has been a member of the
`
`Board since 2009. Calhoun chaired the Governance, Organization and Nominating
`
`Committee from 2017 to 2019, having been a member of that committee since 2011,
`
`and he was a member of the Compensation Committee from 2012 to 2019, and a
`
`member of the Audit Committee from 2009 to 2011. Calhoun served as lead director
`
`from April 2019 until October 2019 and non-executive Chairman from October 2019
`
`until he was named the Company’s President and Chief Executive Officer on
`
`December 23, 2019, effective as of January 13, 2020. From 2010 to 2019, Boeing
`
`paid Calhoun the following compensation:
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$100,000
`$110,000
`$110,000
`$120,000
`$120,000
`$130,000
`$130,000
`$148,342
`$175,110
`$190,279
`$1,333,731
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$130,000
`$140,000
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,601,111
`
`$30,000
`$30,000
`$30,000
`$31,500
`$31,000
`$31,000
`$31,000
`$31,000
`$0
`$31,000
`$276,500
`
`$260,000
`$280,000
`$280,000
`$301,500
`$301,000
`$326,000
`$326,000
`$359,342
`$355,110
`$422,390
`$3,211,342
`
`
`16. Defendant Arthur D. Collins, Jr. (“Collins”) has served as a Boeing
`
`director since 2007. Collins has chaired the Compensation Committee since 2012
`
`4814-1573-3440, v. 1
`
`7
`
`
`
`
`
`
`
`
`
`and is a member of the Governance, Organization and Nominating Committee.
`
`Collins was a member of the Audit Committee from 2007 to 2011. From 2010 to
`
`2019, Boeing paid Collins the following compensation:
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$115,000
`$125,000
`$125,000
`$135,000
`$135,000
`$150,000
`$150,000
`$155,000
`$155,000
`$155,000
`$1,400,000
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$130,000
`$140,000
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,601,111
`
`$31,000
`$31,500
`$31,500
`$31,500
`$31,500
`$31,000
`$31,000
`$31,000
`$31,000
`$31,000
`$312,000
`
`$276,000
`$296,500
`$296,500
`$316,500
`$316,500
`$346,000
`$346,000
`$366,000
`$366,000
`$387,111
`$3,313,111
`
`17. Defendant Edmund P. Giambastiani, Jr. (“Giambastiani”) has served
`
`as a Boeing director since 2009. Giambastiani is a member of the Audit Committee.
`
`From 2010 to 2019, Boeing paid Defendant Giambastiani the following
`
`compensation:
`
`4814-1573-3440, v. 1
`
`8
`
`
`
`
`
`
`
`
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$123,561
`$110,000
`$110,000
`$120,000
`$120,000
`$130,000
`$130,000
`$135,000
`$135,000
`$182,247
`$1,295,808
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$160,630
`$140,000
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,631,741
`
`$5,250
`$3,750
`$5,250
`$5,750
`$6,000
`$7,550
`$6,800
`$9,500
`$10,630
`$10,550
`$71,030
`
`$289,441
`$253,750
`$255,250
`$275,750
`$276,000
`$302,550
`$301,800
`$324,500
`$325,630
`$393,908
`$2,998,579
`
`18. Defendant Lynn J. Good (“Good”) has served as a Boeing director
`
`since 2015. Good chairs the Audit Committee having served as a member of the
`
`Audit Committee since 2015. From 2015 to 2019, Boeing paid Good the following
`
`compensation:
`
`
`Year
`
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$50,664
`$130,000
`$135,000
`$135,000
`$135,000
`$585,664
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$64,305
`$165,000
`$180,000
`$180,000
`$201,111
`$790,416
`
`$31,000
`$30,000
`$0
`$0
`$31,000
`$92,000
`
`$145,969
`$325,000
`$315,000
`$315,000
`$367,111
`$1,468,080
`
`19. Defendant Lawrence W. Kellner (“Kellner”) has served as a Boeing
`
`director since 2011. Kellner chaired the Audit Committee from May 2018 until
`
`December 2019 having been a member since 2011. Kellner was named non-
`
`4814-1573-3440, v. 1
`
`9
`
`
`
`
`
`
`
`
`
`executive Chairman of Boeing’s Board on December 22, 2019. From 2011 to 2019,
`
`Boeing paid Kellner the following compensation:
`
`
`Year
`
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$0
`$137,123
`$120,000
`$120,000
`$140,172
`$145,000
`$156,671
`$160,000
`$160,000
`$1,138,966
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$0
`$174,520
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,365,631
`
`$500
`$31,500
`$31,500
`$31,500
`$31,000
`$31,000
`$31,000
`$31,000
`$31,000
`$250,000
`
`$500
`$343,143
`$301,500
`$301,500
`$336,172
`$341,000
`$367,671
`$371,000
`$392,111
`$2,754,597
`
`20. Defendant Caroline B. Kennedy (“Kennedy”) has served as a Boeing
`
`director since 2017. Kennedy has been a member of the Audit Committee since
`
`2018. From 2017 to 2019, Boeing paid Kennedy the following compensation:
`
`
`Year
`
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$52,983
`$135,000
`$135,000
`$322,983
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$70,644
`$180,000
`$201,111
`$451,755
`
`$0
`$28,000
`$2,100
`$30,100
`
`$123,627
`$343,000
`$338,211
`$804,838
`
`21. Defendant Susan C. Schwab (“Schwab”) has served as a Boeing
`
`director since 2010. Schwab has been a member of the Compensation and
`
`Governance, Organization and Nominating Committees since 2019. Schwab served
`
`4814-1573-3440, v. 1
`
`10
`
`
`
`
`
`
`
`
`
`as a member of the Audit Committee from 2010 until 2019. From 2010 to 2019,
`
`Boeing paid Schwab the following compensation:
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$88,699
`$110,000
`$110,000
`$120,000
`$120,000
`$130,000
`$130,000
`$135,000
`$135,000
`$135,000
`$1,213,699
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$115,308
`$140,000
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,586,419
`
`$14,000
`$11,850
`$28,620
`$17,500
`$21,800
`$23,000
`$22,000
`$26,700
`$31,000
`$21,064
`$217,534
`
`$218,007
`$261,850
`$278,620
`$287,500
`$291,800
`$318,000
`$317,000
`$341,700
`$346,000
`$357,175
`$3,017,652
`
`22. Ronald A. Williams (“Williams”) has served as a Boeing director since
`
`2010. Williams has been a member of the Audit Committee since 2017. Williams
`
`served as a member of the Compensation and Governance, Organization and
`
`Nominating Committees from 2012 to 2016. From 2011 to 2019, Boeing paid
`
`Williams the following compensation:
`
`4814-1573-3440, v. 1
`
`11
`
`
`
`
`
`
`
`
`
`
`Year
`
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$118,219
`$110,000
`$120,000
`$120,000
`$130,000
`$130,000
`$145,007
`$150,000
`$155,279
`$1,178,505
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$150,685
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,481,796
`
`$30,500
`$31,500
`$31,500
`$31,000
`$31,000
`$31,000
`$31,000
`$31,000
`$21,000
`$269,500
`
`$299,404
`$281,500
`$301,500
`$301,000
`$326,000
`$326,000
`$356,007
`$361,000
`$377,390
`$2,929,801
`
`23. Defendants Bradway, Calhoun, Collins, Giambastiani, Good, Kellner,
`
`Kennedy, Schwab, and Williams are sometimes referred to hereafter as the “Current
`
`Director Defendants.”
`
`IV.
`
`FORMER DIRECTOR DEFENDANTS
`
`24. Defendant Linda Cook (“Cook”) was a Boeing director from 2003
`
`through April 2015. During her time on the Board, Cook served on the Audit
`
`Committee from 2004 to 2015. Cook was a member of the Compensation and
`
`Governance, Organization and Nomination Committees in 2011. From 2010 to
`
`2015, Boeing paid Cook the following compensation:
`
`4814-1573-3440, v. 1
`
`12
`
`
`
`
`
`
`
`
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$100,000
`$110,000
`$120,041
`$135,000
`$135,000
`$72,500
`$672,541
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$130,000
`$140,000
`$140,000
`$150,000
`$150,000
`$82,500
`$792,500
`
`$20,000
`$41,500
`$21,500
`$21,500
`$10,500
`$11,000
`$126,000
`
`$250,000
`$291,500
`$281,541
`$306,500
`$295,500
`$166,000
`$1,591,041
`
`25. Defendant Kenneth M. Duberstein (“Duberstein”) was a Boeing
`
`director from 1997 until he retired from the Board on or about April 29, 2019.
`
`Duberstein served as the Board’s independent lead director from December 2005
`
`until April 2019. Duberstein served as a member of the Compensation and the
`
`Governance, Organization and Nominating Committees from 2010 until his
`
`retirement.
`
` From 2010 to 2019, Boeing paid Duberstein the following
`
`compensation:
`
`4814-1573-3440, v. 1
`
`13
`
`
`
`
`
`
`
`
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$140,000
`$150,000
`$150,000
`$160,000
`$160,000
`$175,000
`$175,000
`$171,658
`$144,890
`$67,500
`$1,494,048
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$130,000
`$140,000
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$101,111
`$1,501,111
`
`$31,000
`$31,500
`$31,500
`$31,500
`$31,500
`$31,000
`$31,000
`$28,500
`$31,000
`$123,903
`$402,403
`
`$301,000
`$321,500
`$321,500
`$341,500
`$341,500
`$371,000
`$371,000
`$380,158
`$355,890
`$292,514
`$3,397,562
`
`26. Defendant Edward M. Liddy (“Liddy”) served as a Boeing director
`
`from 2010 until April 2020. Liddy chaired the Audit Committee from 2011 to 2017
`
`and was a member of the Compensation and Governance, Organization and
`
`Nominating Committees from 2017 to 2020. From 2010 to 2019, Boeing paid Liddy
`
`the following compensation:
`
`4814-1573-3440, v. 1
`
`14
`
`
`
`
`
`
`
`
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$56,575
`$117,500
`$125,000
`$140,000
`$140,000
`$155,000
`$155,000
`$143,322
`$135,000
`$135,000
`$1,302,397
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$73,548
`$140,000
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,544,659
`
`$11,500
`$15,000
`$0
`$2,500
`$10,000
`$0
`$0
`$0
`$0
`$0
`$39,000
`
`$141,623
`$272,500
`$265,000
`$292,500
`$300,000
`$320,000
`$320,000
`$323,322
`$315,000
`$336,111
`$2,886,056
`
`27. Defendant Walter James McNerney, Jr. (“McNerney”) was Boeing’s
`
`Chief Executive Officer from 2005 through June 2015. McNerney joined Boeing’s
`
`Board in 2001, serving as its Chairman from 2005 until 2016. From 2010 to 2019,
`
`Boeing paid McNerney the following compensation:
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`20220160166
`TOTAL
`
`
`Salary5
`
`
`Stock
`Awards
`
`
`Option
`Awards
`
`
`All Other
`Comp.6
`
`
`
`Total
`
`
`Non-
`Equity
`Incentive
`$19,740,023
`$6,770,396
`$4,439,000
`$3,300,297
`$3,300,330
`$1,930,000
`$22,958,313
`$5,483,689
`$8,704,300
`$3,420,159
`$3,420,165
`$1,930,000
`$27,484,138
`$7,207,569
`$3,763,497 $10,819,580
`$3,763,492
`$1,930,000
`$23,263,562
`$885,553
`$3,763,503 $12,920,972
`$3,763,534
`$1,930,000
`$28,861,920
`$6,110,172
`$0
`$14,475,000
`$6,272,517
`$2,004,231
`$19,916,946
`$586,220
`$0
`$11,338,320
`$6,272,444
`$1,719,962
`$8,155,662
`$704,160
`$0
`$6,926,502
`$0
`$525,000
`$11,969,193 $26,792,482 $14,247,456 $69,623,674 $27,747,759 $150,380,564
`
`
`5 Consists of director’s fees for 2016.
`
`6 Includes “Change in Pension Value and Nonqualified Deferred Compensation” and
`“All Other Compensation” as reported in Boeing’s Proxy Statements.
`
`4814-1573-3440, v. 1
`
`15
`
`
`
`
`
`
`
`
`
`28. Defendant Dennis A. Muilenburg (“Muilenburg”) served as Boeing’s
`
`Vice Chairman of the Board, President, and Chief Operating Officer from December
`
`31, 2013 until he was named Boeing’s President and Chief Executive Officer on July
`
`1, 2015. Muilenburg served as Chairman of Boeing’s Board from March 2016 until
`
`he resigned from all of his positions at Boeing on December 22, 2019, after the
`
`remainder of Boeing’s Board “decided that a change of leadership was necessary to
`
`restore confidence in the Company moving forward as it works to repair
`
`relationships with regulators, customers, and all other stakeholders” following the
`
`Lion Air and Ethiopian Air crashes. From 2010 to 2019, Boeing paid Muilenburg
`
`the following compensation:
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Salary
`
`
`
`
`Non-Equity
`Option
`Stock
`Incentive
`Awards
`Awards
`
`
`
`
`$1,342,900
`$734,995
`$734,995
`$780,000
`$2,619,900
`$959,994
`$5,405,705
`$884,255
`$3,494,900
`$1,156,559
`$1,156,567
`$941,004
`$4,117,900
`
`$2,474,990
`$1,135,389
`$4,568,549
`
`$5,105,064
`$1,354,269
`$6,431,450
`
`$5,200,019
`$1,640,962
`$8,450,270
`
`$5,775,049
`$1,690,769
`$13,076,350
`
`$7,330,916
`$1,700,000
`$0
`
`$7,246,100
`$2,013,846
`$12,140,494 $40,429,405 $2,851,548 $44,102,219
`
`
`All Other
`Comp.
`
`$1,211,341
`$2,073,240
`$972,582
`$4,070,122
`$2,198,451
`$1,793,859
`$2,534,328
`$1,284,921
`$4,990,249
`$21,129,093
`
`
`
`Total
`
`$4,804,231
`$11,943,094
`$7,721,612
`$11,798,401
`$13,226,333
`$15,066,290
`$18,450,416
`$23,392,187
`$14,250,195
`$120,652,759
`
`29. Defendant Mike S. Zafirovski (“Zafirovski”) served as a Boeing
`
`director from 2004 until April 2020. Zafirosvki was a member of the Compensation
`
`and Governance, Organization and Nominating Committees from 2010 to 2020.
`
`From 2010 through 2019, Boeing paid Zafirovski the following compensation:
`
`4814-1573-3440, v. 1
`
`16
`
`
`
`
`
`
`
`
`
`
`Year
`
`2010
`2011
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Fees Earned
`or Paid in
`Cash
`$100,000
`$110,000
`$110,000
`$120,000
`$120,000
`$130,000
`$130,000
`$135,000
`$135,000
`$135,000
`$1,225,000
`
`
`Stock
`Awards
`
`
`All Other
`Compensation
`
`
`Total
`
`$130,000
`$140,000
`$140,000
`$150,000
`$150,000
`$165,000
`$165,000
`$180,000
`$180,000
`$201,111
`$1,601,111
`
`$31,000
`$31,500
`$31,500
`$31,500
`$31,500
`$31,000
`$31,000
`$31,000
`$31,000
`$31,000
`$312,000
`
`$261,000
`$281,500
`$281,500
`$301,500
`$301,500
`$326,000
`$326,000
`$346,000
`$346,000
`$367,111
`$3,138,111
`
`30. Collectively, Defendants Cook, Duberstein, Liddy, McNerney,
`
`Muilenburg, and Zafirovski are sometimes referred to herein as the “Former Director
`
`Defendants.”
`
`V.
`
`OFFICER DEFENDANTS
`
`31. Defendant James F. Albaugh (“Albaugh”) was President and Chief
`
`Executive Officer of BCA from September 1, 2009 until June 26, 2012. From 2010
`
`to 2012 Boeing paid Albaugh the following compensation:7
`
`
`Year
`
`
`Salary &
`Bonus
`
`
`Stock
`Awards
`
`
`Option
`Awards
`
`2010
`2011
`2012
`TOTAL
`
`$975,262
`$999,550
`$976,290
`$2,951,102
`
`$4,310,057
`$1,249,470
`$1,280,659
`$6,840,186
`
`$1,118,578
`$1,249,441
`$1,280,667
`$3,648,686
`
`
`All Other
`Comp.
`
`
`Non-
`Equity
`Incentive
`$1,335,300 $1,548,822
`$2,794,704
`$2,201,736
`$3,273,420
`$2,817,835
`$7,403,424
`$6,568,393
`
`
`
`Total
`
`$9,288,019
`$8,494,901
`$9,628,871
`$27,411,791
`
`
`7 Boeing reported compensation for individual executives only for those years in
`which the executives were deemed to be “named executive officers.” The charts in
`this section reflect only those years.
`
`4814-1573-3440, v. 1
`
`17
`
`
`
`
`
`
`
`
`
`32. Defendant Raymond L. Conner (“Conner”) was President and Chief
`
`Executive Officer of BCA from mid-2012 until November 2016. Conner was a
`
`member of Boeing’s Executive Council and Vice Chairman of BCA from December
`
`2013 until his retirement at the end of 2017. From 2012 to 2017, Boeing paid Conner
`
`the following compensation:
`
`
`Year
`
`
`Salary
`
`2012
`2013
`2014
`2015
`2016
`2017
`TOTAL
`
`$633,321
`$828,846
`$1,002,500
`$1,016,154
`$1,065,962
`$1,095,385
`$5,642,168
`
`
`Stock
`Awards
`$4,008,775
`$843,743
`$8,497,786
`$2,071,912
`$2,178,146
`$2,284,333
`$19,884,695
`
`
`Option
`Awards
`$290,998
`$843,743
`$0
`$0
`$0
`$0
`$1,134,741
`
`
`
`All Other
`Non-Equity
`Comp.
`Incentive
`$1,601,028
`$1,236,200
`$1,092,876
`$2,052,960
`$4,848,528
`$2,072,500
`$3,153,670
`$2,843,850
`$1,721,257
`$3,986,360
`$1,734,154
`$4,512,758
`$16,704,628 $14,151,513
`
`
`
`Total
`$7,770,322
`$5,662,168
`$16,421,314
`$9,085,586
`$8,951,725
`$9,626,630
`$57,517,745
`
`33. Defendant Scott Fancher (“Fancher”), was a Senior Vice President and
`
`general manager, Airplane Development, BCA, from November 2012 until April
`
`2016. He was a Senior Vice President of Boeing and on Boeing’s Executive Council
`
`from April 2016 until his retirement in September 2017. Fancher’s compensation
`
`was not reported by Boeing in any year, but on information and belief, he was paid
`
`millions of dollars in total compensation from 2012 to 2016.
`
`34. Defendant Greg Hyslop, D.Sc. (“Hyslop”) has been Boeing’s Chief
`
`Engineer and Senior Vice President, Engineering, Test & Technology, and a member
`
`of Boeing’s Executive Council, since March 2016. Hyslop was not listed as one of
`
`4814-1573-3440, v. 1
`
`18
`
`
`
`
`
`
`
`
`
`Boeing’s “named executive officers” except in 2018, when Boeing paid him the
`
`following compensation:
`
`
`Year
`
`2018
`
`
`
`Stock
`Salary &
`Awards
`Bonus
`$601,663 $6,131,208
`
`
`Option
`Awards
`$0
`
`
`
`
`
`All Other
`Non-Equity
`Total
`Comp.
`Incentive
`$1,298,246 $536,040 $8,567,157
`
`35. Defendant Kevin G. McAllister (“McAllister”) was a Boeing Executive
`
`Vice President, member of Boeing’s Executive Council, and President and Chief
`
`Executive Officer of BCA from November 2016 until October 21, 2019, when he
`
`was fired “for a combination of negative developments ‘on his watch.’” From 2016
`
`to 2019, Boeing paid McAllister the following compensation:
`
`
`Year
`
`
`Salary
`
`
`Stock
`Awards
`
`
`Option
`Awards
`
`2016
`2017
`2018
`2019
`TOTAL
`
`$2,092,3088
`$1,012,231
`$1,043,404
`$1,230,007
`$5,377,950
`
`$5,200,019
`$5,775,049
`$7,330,916
`$7,246,100
`$25,377,130
`
`
`
`
`
`
`
`
`Non-
`Equity
`Incentive
`$1,045,000
`$2,187,011
`$3,934,889
`$0
`$7,166,900
`
`
`All Other
`Comp.
`
`
`
`Total
`
`$27,912
`$520,120
`$566,333
`$15,154,248
`$16,268,613
`
`$20,865,820
`$7,219,298
`$7,676,157
`$18,429,318
`$54,190,593
`
`36. Defendant Gregory Smith (“Smith”) has been Boeing’s Chief Financial
`
`Officer since 2019 and is a member of Boeing’s Executive Council. From 2012 to
`
`2019, Boeing paid Smith the following compensation:
`
`
`8 Includes $2,000,000 bonus.
`
`19
`
`4814-1573-3440, v. 1
`
`
`
`
`
`
`
`
`
`
`Year
`
`2012
`2013
`2014
`2015
`2016
`2017
`2018
`2019
`TOTAL
`
`
`Salary &
`Bonus
`$594,635
`$685,700
`$809,231
`$841,154
`$911,442
`$974,308
`$1,032,462
`$1,128,846
`$6,977,778
`
`
`Stock
`Awards
`$609,342
`$616,608
`$6,495,646
`$1,500,009
`$1,700,010
`$11,779,769
`$2,550,173
`$2,430,699
`$27,682,256
`
`
`Option
`Awards
`$609,374
`$616,597
`
`
`
`
`
`
`$1,225,971
`
`
`Non-Equity
`Incentive
`$1,099,095
`$1,553,042
`$2,663,600
`$2,248,649
`$3,071,725
`$3,782,592
`$4,574,957
`$0
`$18,993,660
`
`
`All Other
`Comp.
`$309,080
`$124,065
`$611,074
`$230,003
`$536,884
`$688,945
`$524,466
`$956,258
`$3,980,775
`
`
`
`Total
`$3,221,526
`$3,596,012
`$10,579,551
`$4,819,815
`$6,203,915
`$17,225,614
`$8,682,058
`$4,515,803
`$58,844,294
`
`37. Collectively, Defendants Albaugh, Conner, Fancher, Hyslop,
`
`McAllister, and Smith are sometimes referred to hereafter as the “Officer
`
`Defendants.”
`
`VI.
`
`OTHER CURRENT (NON-DEFENDANT) DIRECTORS
`
`38. Steven M. Mollenkopf has been a Boeing director since April 27,
`
`2020.
`
`39. Akhil Johri has been a Boeing director since April 27, 2020.
`
`40.
`
`John M. Richardson has been a Boeing director since 2019.
`
`JURISDICTION AND VENUE
`
`41. This Court has subject matter and personal jurisdiction because
`
`Nominal Defendant Boeing is incorporated under the laws of the State of Delaware.
`
`For the same reason, this is a proper venue. All Defendants have sufficient business
`
`contacts within the State of Delaware because of their current or former roles as
`
`Boeing directors or officers.
`
`4814-1573-3440, v. 1
`
`20
`
`
`
`
`
`
`
`
`
`42. Venue is proper in this Court as Article VII, § 4 of Boeing’s bylaws
`
`provide that “the Court of Chancery of the State of Delaware shall be the sole and
`
`exclusive forum for (i) any derivative action or proceeding brought on behalf of the
`
`corporation, [and] (ii) any action asserting a claim of breach of a fiduciary duty owed
`
`by any director, officer, or other employee of the Corporation to the Corporation.
`
`FACTUAL BACKGROUND
`
`43. The 737 MAX9 was not designed from a clean slate. Rather than
`
`develop a new plane, Boeing engineers attempted to modernize the 737, which was
`
`built and designed in the 1960s, to make it more fuel-efficient and aerodynamic, in
`
`an attempt to avoid certification and training requirements that a new plane would
`
`have required. The result was a maladapted product of Boeing’s profits-first culture,
`
`fierce competition with Airbus SE to earn market share for single-aisle aircraft, and
`
`a history of resisting and circumventing government regulation.
`
`I.
`
`BOEING’S RELATIONSHIP WITH THE FAA
`
`A. The 1999-2000 FAA Audit
`
`44. Boeing has been the subject of FAA scrutiny for nonconformance and
`
`noncompliance for decades. In 1999, the FAA expressed concern that “a number of
`
`
`9 Each
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