THE Boeing The board is committed to getting the aircraft maker back on track, and new independent chairman Steve Mollenkopf said in a letter that directors are working to regain the trust the company has lost in recent years.
He also said the board was carefully reviewing how Boeing compensates its executive staff and had reduced each executive’s long-term incentive bonuses by about 22 percent. That’s the same percentage decline in the company’s stock between Jan. 5, the day of the Alaska Airlines Flight 1282 crash, and the stock grant date.
“I promise that I and we as a board will leave no stone unturned to get this company where it needs to be,” Mollenkopf said in his letter as independent chairman. “And the work of renewal has already begun.”
The company today released its proxy statement 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 did not want his $2.8 million cash bonus in February after the manufacturing of ‘a Boeing. the door stopper flew off an Alaska Airlines plane. “The board of directors has honored this request,” the company said in its proxy statement.
Boeing shares have fallen 27% since the start of the year, and last month the company announced that Calhoun would step down along with board chairman Larry Kellner and commercial aircraft division CEO Stan Deal. Calhoun switched sides from board of directors to CEO in January 2020, at a time when the company was reeling from two plane crashes that resulted in the deaths of 346 people, dealing a major blow to the credibility of the manufacturer.
Boeing has since paid $160 million to Alaska Airlineswhich was just an upfront payment to restore Alaska’s integrity after the airline grounded its fleet of 65 Boeing 737-9 Max jets.
Even without a bonus, Calhoun’s total direct compensation in 2023 was valued at $32.7 million, largely thanks to stock awards worth $30 million. The company awarded Calhoun a long-term performance-based equity incentive grant of $21 million in February 2023, which was to be paid in 2025. He cannot collect this award until he leaves the company, and even then it will. get it in 10 annual installments. The board also gave him 25,000 restricted stock units worth $5.3 million; half of the grant was acquired last February and the other half will be acquired 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 are acquired.
The reduction in long-term equity resulted in a drop in Calhoun’s 2024 award target from $17 million to $13.25 million, a 38% reduction from his award of 2023 of $21.25 million.
Calhoun also contains 175,435 underwater options, 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 until February 2032. It could raise a total of $45.5 million if the next CEO manages to increase the stock price by around 40%.
The company said Calhoun did not receive a performance stock award in 2020, his first year in the role, because Boeing never made adjustments to his compensation plan to account for the pandemic of Covid-19, unlike other companies. “Although the accident of Alaska Airlines Flight 1282 shows that Boeing still has much work to do, the Board believes that Mr. Calhoun responded to this event in the appropriate manner by taking responsibility for the accident, engaging transparently and proactively with regulators and customers and taking significant steps to strengthen Boeing’s quality assurance, not only in Boeing factories but also throughout the supply chain.
In addition to Mollenkopf’s promise to shareholders to turn around Boeing, he thanked Calhoun and Kellner. He said an investigation into Boeing’s quality and risk processes, led by Admiral Kirkland Donald, was still underway.