Shareholders approve controversial pay plan amid crisis at Boeing

Boeing shareholders have backed the plane maker’s plan to give outgoing chief Dave Calhoun a 2023 pay package worth about $33m (£25m).

Vote and Criticism

A majority of shareholders voted in favor of Boeing‘s proposed pay plan, despite significant criticism stemming from a crisis triggered by a mid-air blowout of a panel on one of its planes in January. 

These votes, typically held during the company’s annual meetings, are advisory and non-binding. A detailed breakdown of the vote was not immediately available.

Shareholder Concerns

Before the meeting, at least one major shareholder advisory group had criticized the compensation plan. The plan also drew attention from several investors who voiced their concerns during the event. 

A key issue raised was the decision to keep outgoing CEO Dave Calhoun on the board of directors, which was also approved.

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Calhoun’s Compensation Package

Dave Calhoun’s compensation package for 2023 included a salary of $1.4 million (£1.1 million) and stock awards worth about $30 million (£23 million). This is an increase from his 2022 package, which was approximately $22.6 million (£17 million). 

In a question-and-answer session post-vote, the firm faced scrutiny over how Mr. Calhoun’s compensation and those of other executives were justified given the severe challenges the company is currently facing.

Response from Leadership

New board chairman Steve Mollenkopf explained that the board had reduced some 2024 awards for executives following the January incident and had quickly revised the design of its pay incentives. The new plan prioritizes product safety as the primary measure of performance, rather than financial factors such as cash flow and share price.

Acknowledging the Challenges

Both Mollenkopf and Calhoun acknowledged the significant strains on the company, with Calhoun describing some challenges as “potentially existential.” The Alaska Airlines incident has revived concerns about Boeing’s manufacturing and safety procedures, leading to numerous investigations and lawsuits.

Legal and Regulatory Issues

Recently, the U.S. Department of Justice (DOJ) announced it was considering prosecuting Boeing over the deadly crashes involving its 737 Max aircraft in 2018 and 2019, after determining that Boeing had breached an agreement that previously shielded it from criminal charges.

Leadership Transition

In March, Boeing announced that Dave Calhoun would step down by the end of the year. The search for his replacement is now a critical focus for the company. Chairman Mollenkopf emphasized the importance of the coming months and years for Boeing as it seeks to regain lost trust.

Board’s Justification for Compensation

In proposing the pay package to shareholders, the company praised Calhoun’s leadership in navigating challenges such as the COVID-19 pandemic since 2020. The board highlighted Calhoun’s response to the Alaska Airlines incident, emphasizing his focus on safety, quality, and transparency as essential for Boeing’s future.

“The 737 MAX accidents and COVID have combined to create tremendous stress on the Company’s manufacturing operations and supply chain,” the board stated. “However, the Board believes that Mr. Calhoun’s primary focus on safety, quality and transparency is exactly what Boeing has needed, and continues to need.”

Boeing’s leadership remains committed to addressing these challenges and improving its safety and operational standards to restore stakeholder confidence.