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November 21, 1997
1-1851-6-0347
Donald W. Shuper
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Re: The Boeing Company Employee Retirement Plan
Dear Mr. Shuper:
This is in response to your letter to the Retirement Plan Committee dated August 24, 1997, regarding the calculation of your monthly benefit under the Boeing Employee Retirement Plan. You have questioned the determination of your Credited Service amount and your Final Average Earnings.
As an engineer with the Company, you were an exempt employee. To determine Credited Service under the Plan, Article 3.02 of the Plan Document (enclosed) states "In the case of an Employee in an employment status which is exempt from the Fair Labor Standards Act, Service will be converted into Hours of Service on the basis of 45 Hours of Service for each Payroll Week during which the Employee has any Service." This also is explained on page 4-5 of the Summary Plan Description (SPD).
Your Credited Service was determined as follows:
10.255 years before 1/1/75 based on your time on the active payroll
20.000 years from 1975 through 1994
1.000 year for 20, 21, & 22 years of vesting service
.765 years for 1/1/95 through 7/1/95 which includes regular time of 27weeks x 45 hours = 1215 hours and vacation pay = 315 hours
5.000 years for the Special Retirement Program
37.020 years of Credited Service
The Plan does credit Hours of Service for sick leave when you are absent from work because of illness and are paid sick leave. The provision is Article 2.21(a) (2) of the Plan and is described on page 4-5 of the SPD. Vacation hours that are paid upon retirement count toward Credited Service based on a conversion to weeks of vacation and credit for 45 hours per week. You were paid approximately 252 hours of vacation on your final check. That equates to 6.3 weeks of pay and 315 hours of service (45 x 7) towards Credited Service for retirement purpose which was included above.
Credited Service is not granted for unreserved sick leave hours paid at retirement. These hours were not paid because of illness or absence from the Company but in accordance with Company Payroll practices. See the enclosed Memo dated January 8, 1980. The rule referred to deals with not granting double credit for same hours worked or not worked.
Your Final Average Earnings of $XX,XXXwas calculated correctly according to Plan provisions. Article 2.20 of the Plan provides that Final Average Earnings are based on Basic Annual Compensation Rates on the first day of each calendar month during the 60 consecutive calendar months out of the last 120 such months that the Employee performed Service (which means on the active payroll) for the Company. The Plan states if the Employee retires from the Active Payroll of the Company, the Employee will be deemed to have performed Service for the Company on his Retirement Date at the Basic Annual Compensation Rate in effect immediately preceding his retirement. Final Average Monthly Earnings, as shown on your Benefit Statement, were determined based on this provision and includes the Productivity Payment Plan payments or Lump Sum Payment Plan awards which the Employee was entitled to receive during the five years immediately preceding the Employee's Retirement Date divided by 60 (which converts these payments to a monthly rate over that period). This is also explained on page 4-10 of the SPD, and Summary of Plan Provisions 1995 Table IV-3R.
Although vacation paid at the time of retirement is used for Credited Service, it is not used to add additional months of Basic Annual Compensation Rates since you are not on the Active Payroll at the time of payment. Vacation that was in your account prior to retirement could have been used to extend your Retirement Date another month if the vacation was used in lieu of regular pay while you were absent from work but still an Employee of the Company.
You have stated that you had approximately 94 hours of vacation in your account that could have been used prior to your retirement. This amount would not have taken you past another month for F.A.E. purposes since to qualify for the Special Retirement Program you had to retired by July 1, 1995. The approximate 158 additional hours of vacation on your final paycheck were in your vacation accrual account that were not available to you until your next vacation eligibility date. Therefore, you could not have used it prior to your retirement date. If you had worked past your vacation eligibility date and had been awarded your vacation, you could have extended your retirement date to have used your vacation as regular pay and would have receive additional months of salary history for FAE based on the fact that you were still on the Active Payroll. Since your vacation eligibility date was July 5th , after the deadline for the Special Retirement Program, you could have postponed your retirement date but then you would not been eligible for the Special Retirement Program and the additional 5 years of Credited Service.
The Boeing Retirement Office and the Plan Administrator have a responsibility under law to apply plan provisions consistently and uniformly for all participants. Consistent treatment of similarly situated employees assures the impartial administration of the Plan. Therefore, The Boeing Retirement Office determines that there is no basis under the provisions of the Plan to change your benefit amount.
Sincerely,
Joni Herwick
Manager - Eligibility and Service
Boeing Retirement Office
Enclosures:
Summary Plan Description 1993 Edition
Plan Document, January 1, 1995 Edition
Memo regarding Unreserved Sick Leave
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