Boeing's outgoing CEO David Calhoun got millions in extra awards just a year ago

By Brett Arends

Calhoun's pay averaged $22 million a year during his first three years - and he's in line for a $14.9 million payout for 'retiring' early

If you want to get a fascinating insight into the crisis that has enveloped Boeing Co. (BA), look no further than the company's filings relating to executive compensation - or, some might say, executive plunder.

There you will find that the board of directors kept lavishing tens of millions in pay, bonuses and extra awards on Chief Executive David Calhoun, even as the company's stockholder lost billions and the once-iconic company's reputation went down the tubes.

You will find that Calhoun, a finance guy parachuted into the hot seat from private-equity firm Blackstone just over four years ago, was paid about 150 times more per year than the typical worker - i.e. the people building the planes.

You'll find that his pay averaged $22 million a year during his first three years - and that he is in line for a $14.9 million payout for "retiring" early.

Astonishingly, Boeing filings show that as recently as a year ago, the board even gave him an extra $619,000 bonus, specifically citing the great job he was supposedly doing on things like quality, safety and transparency with regulators.

Also read: Opinion: Boeing's CEO is departing, but the company's problems run far deeper

In case you missed it, Calhoun and other executives on Monday agreed to step down early amid a mounting scandal over, er, quality, safety, and... transparency with regulators.

For Boeing and Calhoun, the final straw came last week, when major airline executives, fed up with all the issues with Boeing planes and its production schedule, demanded direct meetings with the board of directors.

Probably the most devastating judgment comes from Michael O'Leary, the blunt-taking Irishman who has built European low-cost airline Ryanair (RYAAY). His confidence in Boeing planes is now so low, he told CNN recently, that when the airline takes delivery of a new one "we spend 48 hours going through the plane checking it for errors, omissions or anything else."

(Meanwhile aerospace analyst Richard Aboulafia gets credit for the money quote. He told CNN that Calhoun is "the very best CEO that Airbus has ever had," referring to Boeing's now-booming rival).

Boeing has been in crisis since two crashes involving its new 737 Max airliners in 2018 and 2019, which killed 346 people. CEO Dennis Muilenberg was ousted in late 2019, to be replaced by Calhoun.

Things got worse at the start of this year, when a panel blew off an Alaska Airlines Boeing 737 Max soon after takeoff. An investigation found that Boeing had apparently forgotten to install four bolts.

The FAA has slammed Boeing over quality-control issues, while the National Transportation Safety Board has criticized the company for failing to produce key safety documents.

Clearly the problems started a long time before Calhoun became CEO. Some critics argue they go back a quarter century, to the late 1990s, when Boeing merged with rival McDonnell Douglas. Nonetheless, Boeing stockholders have lost just over 40% of their money on Calhoun's watch. During the same period, shares of Europe-based Airbus (FR:AIR) are up 33%, even despite the weak euro. The S&P 500 SPX has risen more than 70% in that time.

The good news for Boeing stockholders is that all sorts of rich and powerful people in America - and especially Uncle Sam - have enormous economic incentives in keeping Boeing in the air. It is a major defense contractor. But it's also one of just two major airplane manufacturers left. Nobody wants Airbus to have a total monopoly.

We will have to wait for further news from the company about how much Calhoun will walk away with. The overall picture, as usual, is obscured by the elaborate, byzantine legal disclosures. But page 80 of the last proxy shows that as of February 2023, he had already accumulated 225,000 shares and stock units, with a gross value of about $43 million. Nice work if you can get it!

-Brett Arends

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03-26-24 1327ET

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