HOMEPAGE      Why BOD Changed their response 


A few proposal issues and notes

1) Plan administrator says PVP plan is only a change in formulas, and $$ change is not material. " The Alert specifically addresses employee pension plan changes that "could be expected to have a material impact on the results of operations and cash flows of those companies." As explained below, such an event did not occur at Boeing. On January 1,1999, Boeing did establish a cash balance plan for a large portion of its salaried employees. However, the change in plan provisions did not significantly change the benefits already earned, the amount of benefits to be earned in the future, the existing obligation, expected future obligations, or funded status. The change was primarily one of benefit formula in order to bring the employees of the three heritage companies under a single plan. The change was disclosed in Financial Footnote 14, on page 67 of the 1998 Annual Report, and the increase in the pension obligation was explicitly quantified at $420 million.

2) BOD says :
The Company did not adopt the PVP to reduce pension-related costs. On the contrary, the PVP increased the Company's pension liability substantially, as was disclosed in the 1998 Annual Report. . . . Employers are not required to offer their employees a choice between pension plans, and most employers do not, for good business reasons. Large costs and significant administrative difficulties would be associated with maintaining numerous plans and benefit formulas, meeting the myriad federal regulations that apply to each plan, and offering and implementing employees' choices as they terminate or retire over a period of decades . .
3) Although BA documents supposedly warn employees that " It informed them that "the rate at which you earn future benefits may be more- or less-than the rate at which you would have earned benefits had you continued under The Boeing Company Employee Retirement Plan."
BOD says:
The Company believes, based upon its analysis, that for most employees who were near retirement age or who had long service when the PVP took effect, there is little difference in projected retirement benefits.. . . Of course different employees will be impacted differently. Contrary to the Proponent's Supporting Statement, overall, the PVP provides a level of benefits that is very close to, and in some cases better than, the benefits provided by the prior plans..
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4) About comparison "1986 ANNUAL MEETING OF THE CONFERENCE OF CONSULTING ACTUARIES:
Gary Hallenbeck - Towers Perrin [BA actuarial firm ]"The third group of companies that ought to be looking at a cash balance plan would be those companies that are looking to reduce or at least control pension cost in the future." "The switch to the hybrid approach in effect represents converting the final pay play to a career pay plan with its inherent greater control of future costs but without the negative aspects of having to communicate that kind of change to the employee population. Needless to say, the way the plan is presented to employees looks so dramatically different than the defined benefit plan that the employees are used to that, and the change can be used to mask a benefit cutback." "Earlier I indicated one of the situations where a company might want to consider this approach is when it can be used to mask a benefit cutback."

5) Boeing spouted to Wichita that giving choice of plans at retirement or termination is somehow impossible . Bullpucky. Kodack, Motorola, AT&T , and recently 3M have done that. . AT&T did it via union contract with the CWA. When BA tried that in their arguments to the SEC, they lost, -

***May update-Wichita contract will result in conversion back to old plan at year end ***

6) See What AT&T Managers are doing re pension ripoffs - they are in court and the fight is getting heavy .