Boeing’s board of directors is working to get the airline maker back on track, and new independent chairman Steve Mollenkopf said in a letter that directors are focused on regaining the trust the company has lost in recent years.
He also said the board was carefully examining how Boeing pays management staff and that it had cut each executive’s long-term incentives by about 22%. This is the same percentage that the company’s shares fell between January 5, the day of the Alaska Airlines Flight 1282 crash, and the date the stock awards were granted.
“I promise that I personally, and we as a Board, will leave no stone unturned in our efforts to get this company where it needs to be,” Mollenkopf said in his letter as independent chairman. “And the renovation work has already begun.”
The company today released its proxy report to investors ahead of its annual shareholder meeting on May 17. In it, the board revealed that outgoing CEO Dave Calhoun told the board he didn’t want his $2.8 million cash bonus in February after a Boeing-made car. the door plug flew off an Alaska Airlines plane. “The Board honored that request,” the company said in its proxy statement.
Boeing shares are down 27% year to date, and last month the company announced that Calhoun would be departing along with board chairman Larry Kellner and commercial aircraft division CEO Stan Deal. Calhoun went from serving on the board of directors to taking on the CEO role in January 2020, a period when the company was rocked by two plane crashes that killed 346 people, dealing a blow to the manufacturer’s credibility.
Boeing has since paid $160 million to Alaska Airlines, which was just an initial payment to clean up Alaska after the airline grounded its fleet of 65 Boeing 737-9 Max planes.
Even without bonuses, Calhoun’s total direct compensation in 2023 was valued at $32.7 million, driven largely by stock grants worth $30 million. In February 2023, the company gave Calhoun a long-term, performance-based equity incentive of $21 million, which was due to be paid in 2025. He won’t be able to collect the award until he leaves the company, and even then he will. receive it in 10 annual installments. The board also granted him 25,000 restricted shares worth $5.3 million; half of the grant was awarded last February and the other half will be awarded in February 2025 if he is still with the company. However, Boeing cautioned that there is no guarantee that the grants will have that value if and when they mature.
The cut to long-term capital resulted in a reduction of Calhoun’s 2024 premium target from $17 million to $13.25 million, or a 38% reduction from his 2023 premium of $21, 25 million.
Calhoun also holds 175,435 options underwater, meaning Boeing’s current stock price, $183.14, is below the options’ strike price. The first set doesn’t expire until February 2031 and the second set expires in February 2032. It could raise a total of $45.5 million if the next CEO manages to boost the stock price by about 40%.
The company said Calhoun did not get a performance equity subsidy in 2020, his first year in the role, because Boeing never made changes to its business plan to account for the Covid-19 pandemic, unlike other companies. “While the Alaska Airlines Flight 1282 crash demonstrates that Boeing still has much work to do, the Board believes that Mr. Calhoun responded to this event in the right way by taking responsibility for the crash, engaging transparently and proactively with regulators and customers and taking important steps to strengthen Boeing’s quality assurance, not only within Boeing factories but also in the supply chain.”
In addition to his promise to shareholders to turn Boeing around, Mollenkopf thanked Calhoun and Kellner. He said an investigation into Boeing’s quality and risk processes led by Admiral Kirkland Donald is still ongoing.