A staggering and historic end-of-year pay package has been granted to Boeing’s CEO, in the wake of a very difficult first quarter for the aircraft manufacturer.
Boeing’s Largest Payout
Shareholders of Boeing approved a $33 million pay package for departing CO Dave Calhoun, marking the largest payout ever given to a Boeing CEO in its century-long history.
Much Larger Than the Last
The compensation package, which was granted for the 2023 fiscal year, is 45% larger than Calhoun’s last end-of-year pay package of $22.6 million granted in 2022.
A Difficult Year
It’s a stunning amount of money for Calhoun, who announced his decision to step down from the lauded position back in March. It comes at a time of enormous turmoil and upheaval for the aircraft manufacturer.
Stock and Salary
Most of the package will be comprised of $30 million worth of company stock awards, and $1.4 million will be salary.
Several Wins for Calhoun
The pay package isn’t the only win for Calhoun. Once he officially leaves the company at the end of the year, he will also receive a $45 million stocks and options package. He will also maintain his seat on the company’s board of directors.
Defending the Vote
While some have questioned the enormous pay package, the company’s new chairman Steve Mollenkopf has defended the decision on the basis of “long-term performance.”
“Aligning Leadership Pay With Performance”
“Our compensation program is designed to align leadership pay with the long-term performance of our business,” Mollenkopf told reporters. “It’s really driven by meeting our commitments to the highest safety and quality standards.”
A Confident Decision
“The board is confident that the current compensation structure continues to directly align with performance,” he continued.
Recognizing “Meaningful Progress”
According to Mollenkopf and the company board, while “certain performance criteria have not been met” by Calhoun, the compensation necessarily recognized “the meaningful progress made to restore operational and financial strength.”
Safety and Quality?
Claims of “commitment to safety and quality standards” may seem ironic to some, as much of the corporation’s troubles in the last few years have been the result of evident safety issues.
A Rough Start to the Year
Boeing’s most recent high-profile drama began at the beginning of the year in early January when a Boeing 737 Max 9, owned by Alaska Airlines, had a door plug ripped from the side of a plane mid-flight.
Safety Called into Question
The incident made headlines around the world, calling the safety of Boeing aircraft into question, as well as the manufacturing process and quality controls.
A Slate of Issues
Since then Boeing has been swamped by bad publicity, the mass grounding of Max 9 aircraft, pending lawsuits, federal investigations, and compensation payouts to airlines that were affected by the incident and mass groundings.
Five Years of Problems
It was an enormous hit to the corporation, which has been facing financial problems for the last five years. Several fatal crashes lead to 20-month groundings of the 737 Max, Boeing’s most popular aircraft.
A Surprising Payout
The last five years of chaos for the company might explain why so many are surprised by Calhoun’s historic payout.
Controversial Tenure
He has served as the company’s CEO since 2020, which means he has overseen one of the most disastrous periods in the history of the company, particularly where public perception is concerned.
Rejected Bonus
Calhoun’s decision to stand down was informed by the last few months of disarray, giving the company a chance to start afresh. He also announced his decision to reject an annual incentive bonus of $2,800,000.
$78 Million Worth of Payment Packages
The board made it clear that Calhoun rejected the payment due to the Alaska Airlines scandal. But it may seem like a paltry sum compared to the $78 million worth of salary and company stocks and options he will have received by the end of the year.
One Group Lobbed Criticisms
While a detailed breakdown of the shareholder vote has not been released, one shareholder advisory group for the company did openly criticize the package proposal before the vote was cast.
A New Start
Regardless of compensation and Calhoun’s leaving package, the chief concern for Boeing now is finding a suitable replacement. “The months and years ahead are critically important for our company as we take the necessary steps to regain the trust lost in recent times,” Mollenkopf told reporters.
Featured Image Credit: Shutterstock / Michael Vi.
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