Introduction

Boeing as a company was established by Mr. William Boeing in the year 1916 with its maiden
flights being launched in the same year. After undergoing a lot of structural changes owing to the
change in the law in US, the company’s largest aircraft Boeing 314 Clipper was first flown in June
1938. This aircraft could carry 90 passengers on day flight and 40 during the night flight became
huge success and allowed the flight all across the world. The next model launched was of307
Stratoliner, the world’s first pressurized-cabin transport aircraft. The specialty of this aircraft was
that it could fly at the altitude of 20,000 feet (Krugman 1986). The journey of Boeing never stopped
after that. It designed bombers during the world-war. Military aircraft became its another advanced
specialty (Leary, 1995). In 1950s the company started its first jet airliner with a design of four
engines meant for the 156 passengers, making it a leader in the market. Next came Boeing 737
with three engines followed 727 with the twin engine concept. In 1970s, the Boeing 747 was
launched which had increased capacity of 450 passengers. Further versions were discovered to
meet with the increased air traffic and passengers load.

The learning points from the Boeing case

A code of conduct is a set of rules outlining the social norms and rules and responsibilities of, or
proper practices for, an individual, party or organization. Related concepts include ethical, honor,
moral codes and religious laws. In its 2007 International Good Practice Guidance, "Defining and
Developing an Effective Code of Conduct for Organizations", the International Federation of
Accountants provided the following working definition: "Principles, values, standards, or rules of
behaviour that guide the decisions, procedures and systems of an organization in a way that (a)
contributes to the welfare of its key stakeholders, and (b) respects the rights of all constituents
affected by its operations." A common code of conduct is written for employees of a company,
which protects the business and informs the employees of the company's expectations. It is ideal
for even the smallest of companies to form a document containing important information on
expectations for employees. The document does not need to be complex or have elaborate policies,
but the file needs a simple basis of what the company expects from each employee.

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1. Non-Discrimination and Harassment

It is the policy of The Boeing Company to attract and retain the best qualified people available
without regard to race, color, religion, national origin, gender, sexual orientation, gender identity,
age, physical or mental disability, or veteran status. Our nondiscrimination policy applies to
applicants as well as employees and covers all terms and conditions of employment, including
recruiting, hiring, transfers, promotions, terminations, compensation and benefits. Discrimination
or harassment based on any of the above factors is prohibited, as is retaliation against a person
who has made a complaint or given information regarding possible violations of this policy.

The purpose of Ethics Recommitment events is to reinforce the importance of ethics and good
business conduct at all times. Recommitment offers the opportunity to learn and to share
knowledge and understanding at individual work sites. It provides a place and a time for employees
to ask questions about ethics decisions, to learn more from real life case studies and to have
meaningful discussions on how to deal with ethical situations or matters. In some instances, we
are including our annual ethics refresher training the Ethics Challenge as part of the Ethics
Recommitment event this year. That training, which includes real-life work examples from our
business units, will occur annually instead of three times a year. We plan to unify our efforts into
a single enterprise wide Ethics Recommitment event in 2005.

2. Work Environment and Compensation

They are committed to promoting a work environment that fosters communication, productivity,
creativity, teamwork, and employee engagement. As a global company, we seek to provide
employees with compensation and benefits that are fair and equitable for the type of work and
geographic location (local market) where the work is being performed, and competitive with other
world-class companies. Their ethical climate is healthy but continues to get healthier. We have
had several isolated failures that have hurt us in a very public way. On the other hand, this has also
raised the awareness of how important it is for all of us to be watchful and to protect our company
from undue harm.

When you read news articles regarding Boeing’s failures, it is important to remember that there
are many instances of positive news about our company, and that we are growing healthier every

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day through increased awareness such as training, education, improved processes and
recommitment sessions. Every Boeing employee plays a part in our ethical climate by learning
more about ethics, by asking more questions, by “doing the right thing” and by seeking help when
necessary.

3. Expected behaviors

The Boeing Code of Conduct outlines expected behaviors for all Boeing employees. Boeing will
conduct its business fairly, impartially, in an ethical and proper manner, and in full compliance
with all applicable laws and regulations. In conducting its business, integrity must underlie all
company relationships, including those with customers, suppliers, communities and among
employees. The highest standards of ethical business conduct are required of Boeing employees
in the performance of their company responsibilities. Employees will not engage in conduct or
activity that may raise questions as to the company’s honesty, impartiality, reputation or otherwise
cause embarrassment to the company. There are many ways an employee can get help; all are
good. An employee can go to their supervisor or Human Resources, call or write the Ethics Line
anonymously, if they want or seek out their Ethics Advisor.

Ethics

The purpose of the Ethics and Business Conduct program is to:

Communicate the Boeing Values and standards of ethical business conduct to employees

Inform employees of company policies and procedures regarding ethical business conduct

Establish companywide processes to assist employees in obtaining guidance and resolving

questions regarding compliance with the company's standards of conduct and the Boeing Values

Establish companywide criteria for ethics education and awareness programs

Company Policy POL-2 "Ethical Business Conduct"

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POL-2 applies to all employees of The Boeing Company, including subsidiaries, contingent labor,
consultants, and others acting for the company ("employees").

Boeing will conduct its business fairly, impartially, in an ethical and proper manner, in accordance
with the company's values and Code of Conduct, and in full compliance with all laws and
regulations. In the course of conducting company business, integrity must underlie all company
relationships, including those with customers, suppliers, and communities and among employees.
The highest standards of ethical business conduct and compliance are required of Boeing
employees in performance of their company responsibilities. Employees must not engage in
conduct or activity that may raise questions as to the company's honesty, impartiality, or reputation
or otherwise cause embarrassment to the company. Conduct that is prohibited under Boeing policy
or does not comply with laws and regulations may not be accomplished on an employee's behalf
by anyone outside the company.

All employees must sign and abide by the Boeing Code of Conduct, which requires that they
understand the code, and ask questions, seek guidance, report suspected violations, and express
concerns regarding compliance with this policy and the related procedures.

To support the requirement for complete and accurate financial records and reporting, all
employees of the Finance organization have an additional Code of Conduct for Finance.

In addition, the Board of Directors of The Boeing Company has adopted a Code of Ethical
Business Conduct that complies with the standards set forth in the New York Stock Exchange's
corporate governance rules.

The Boeing Company will administer ethics and compliance programs to promote its commitment
to integrity and values as set forth in the Boeing values and Code of Conduct and to ensure
compliance with laws, rules, and regulations. These programs will inform employees of company
policies and procedures regarding ethical business conduct and help them to resolve questions and
to report suspected violations. Managers are responsible for supporting implementation of ethics
and business conduct programs, and monitoring compliance to the company's values and ethical
business conduct guidelines through such programs. Managers are responsible for creating an open

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and honest environment in which employees feel comfortable in bringing issues forward.
Retaliation against employees who raise genuine concerns will not be tolerated.

1. Conflict of Interest.

Directors must avoid any conflicts of interest between them and the Company. Any situation that
involves, or may reasonably be expected to involve, a conflict of interest with the Company, should
be disclosed promptly to the Chairman of the Board or the Chairman of the Governance and
Nominating Committee.

A “conflict of interest” can occur when a Director’s personal interest is adverse to – or may appear
to be adverse to the interests of the Company as a whole. Conflicts of interest also arise when a
Director, or a member of his or her immediate family1, receives improper personal benefits as a
result of his or her position as a director of the Company.

This Code does not attempt to describe all possible conflicts of interest that could develop. Some
of the more common conflicts from which Directors must refrain, however, are set out below.

Relationship of Company with third parties. Directors may not engage in any conduct or activities
(other than in connection with Board consideration of a prospective business or contractual
relationship wherein a Director is carrying out his or her fiduciary responsibilities) that impair the
Company’s relationship with any person or entity with which the Company has or proposes to
enter into a business or contractual relationship.

Compensation. Non Employee Directors may not accept compensation from the Company for
services performed for the Company other than director’s fees and compensation associated with
their activities as a director unless such compensation is approved in advance by the Chairman of
the Governance and Nominating Committee.

Gifts. Directors and members of their families may not accept gifts from persons or entities who
deal with the Company in those cases where any such gift has more than a nominal value, is being
made in order to influence the Director’s actions as a member of the Board, or where acceptance
of the gifts could create the appearance of a conflict of interest.

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2. Corporate Opportunities.

Directors are prohibited from: (a) taking for themselves opportunities related to the Company’s
business; (b) using the Company’s property, information, or position for personal gain; or (c)
competing with the Company for business opportunities, provided, however, if the Company’s
“disinterested Directors,” as defined under applicable law, determine that the Company will not
pursue an opportunity that relates to the Company’s business, a Director may do so.

3. Confidentiality.

Directors shall maintain the confidentiality of information entrusted to them by the Company and
any other confidential information about the Company that comes to them, from whatever source,
in their capacity as a Director, except when disclosure is authorized or legally mandated. No
Director shall use confidential information for his or her personal benefit or to benefit persons or
entities outside the Company. For purposes of this Code, “confidential information” includes all
non-public information relating to the Company.

4. Compliance with Laws, Rules and Regulations; Fair Dealing.

Directors shall comply, and oversee compliance by employees, officers and other Directors, with
laws, rules and regulations applicable to the Company, including insider-trading laws.
Transactions in Company securities are governed by the Company’s Insider Trading Procedure
(Procedure 12).

5. Encouraging the Reporting of any Illegal or Unethical Behavior

Directors shall continue to promote ethical behavior and take steps to ensure that the Company
continues to: (a) encourage employees to talk to supervisors, managers and other appropriate
personnel when in doubt about the best course of action in a particular situation; (b) encourage
employees to report violations of laws, rules, regulations or the Company’s Ethical Business
Conduct Guidelines to appropriate personnel; and (c) inform employees that the Company will not
allow retaliation for reports made in good faith.

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6. Compliance Procedures.

Any suspected violations of this Code should be communicated promptly to the Chairman of the
Board or the Chairman of the Governance and Nominating Committee.