Boeing Executive
Vice President and CFO Mike Sears has been dismissed for cause effective
immediately as the result of circumstances surrounding the hiring of Darleen
Druyun, a former U.S. government official. Druyun, who has been vice president
and deputy general manager of Missile Defense Systems, also has been dismissed
for cause.

Sears was dismissed for violating company policies by communicating
directly and indirectly with Druyun about future employment when she had not
disqualified herself from acting in her official government capacity on
matters involving Boeing. In addition, an internally initiated review found
both attempted to conceal their misconduct.

“Compelling evidence of this misconduct by Mr. Sears and Ms. Druyun came
to light over the last two weeks,” said Boeing Chairman and CEO Phil Condit.
“Upon review of the facts, our board of directors determined that immediate
dismissal of both individuals for cause was the appropriate course of action.”

Over the past several months Boeing has made a concentrated effort to
enhance its programs and policies to ensure understanding that ethical
breaches will not be tolerated. “The board of directors retained former Sen.
Warren Rudman of Paul, Weiss, Rifkind, Wharton & Garrison to review Boeing’s
ethics programs,” Condit said. “One of the first actions we took as a result
was to create the Office of Internal Governance, with its leader reporting
directly to me. The board and I have asked Senator Rudman to extend his
review and examine Boeing’s procedures and practices on hiring government
employees to ensure this type of incident never happens again,” said Condit.

“Boeing must and will live by the highest standards of ethical conduct in
every aspect of our business,” Condit said. “When we determine there have
been violations of our standards, we will act swiftly to address them, just as
we have today.

“The action taken today reflects in no way on the financial condition of
the company, which remains excellent,” Condit added.

Boeing has informed the Department of the Air Force of the actions taken
and will continue to cooperate with the government in its ongoing
investigation regarding this matter. It is not possible to predict at this
time what actions the government might take against the individuals or Boeing
and the consequences of those actions.