Boeing CEO Faces Long To-Do List to Collect $7 Million Bonus
(Bloomberg) -- Boeing Co. Chief Executive Officer Dave Calhoun stands to reap a $7 million bonus once the planemaker finally gets the grounded 737 Max jetliner back in the air. But there’s a catch, according to a company filing.
To collect, the new CEO must also resolve lingering issues with the aerospace titan’s other problem-plagued programs. That means achieving the first human flight of Boeing’s Starliner spacecraft and ending the production woes bedeviling the KC-46 tanker, which have drawn the Pentagon’s ire.
Also on his to-do list: successfully guiding the 777X, Boeing’s first new jetliner to follow the Max, through regulatory review and into the commercial market. Then there’s the challenge of restructuring Boeing’s engineering corps to sharpen the focus on safety, hitting long-range milestones for the company’s services division and launching joint ventures with Brazilian planemaker Embraer SA.
If the U.S. manufacturer hasn’t substantially achieved these milestones by the end of 2023, Calhoun will forfeit the payout, Boeing said in a filing Monday that revealed the terms of his Jan. 10 hiring agreement. Calhoun, 62, would still be well paid, with $10.9 million annual target compensation and an additional $10 million award of restricted stock that vests over three years.
But Calhoun’s bonus drew criticism when it was initially announced as he replaced Dennis Muilenburg, who was ousted after repeatedly missing targets for ending a global flying ban on the Max following two fatal accidents. Democratic lawmakers had called on Boeing to cancel the payout immediately, Feb. 4, saying doing so would ensure that he had no incentive to rush the plane back into the sky.
Calhoun’s rewards, which were approved by a Boeing board committee Sunday, are subject to an “enhanced clawback policy that applies to instances of misconduct that compromise the safety of the company’s products or services.”
Separately, Boeing directors elected Qualcomm Inc. Chief Executive Officer Steve Mollenkopf and Akhil Johri, the former chief financial officer of aerospace partsmaker United Technologies Corp. as directors on Monday.
Mollenkopf and Johri bring technical expertise to a board that has drawn fire for skewing toward the financial sector and responding slowly as crisis engulfed Boeing last year. Mollenkopf, 51, is an electrical engineer by training while Johri, 58, spent a quarter-century at one of Boeing’s largest suppliers.
“They are proven leaders at complex, global enterprises and together will bring significant additional safety, engineering, software and financial expertise to our board,” Larry Kellner, Boeing’s new chairman, said in a statement Monday.
The board revamp extends an overhaul of Boeing’s leadership as the company seeks to salvage its battered reputation for engineering prowess. When Muilenburg resigned, Calhoun and Kellner were the only directors with commercial aviation experience at a time when Boeing faces crucial decisions on product strategy and quality.
Kellner, the former head of Continental Airlines, took over as Boeing chairman from Calhoun, a veteran of General Electric Co.’s aircraft engines division.
Mollenkopf, who has led Qualcomm since 2014, helped the company navigate the development of 5G technology. Like Calhoun, he’s an alumnus of Virginia Tech.
Johri stepped down as United Technologies chief financial officer in November, after a four-year stint in the job. While he remains an adviser, Johri was set to be squeezed out as the company nears a merger with defense contractor Raytheon Co., whose current CFO will assume the role for the combined company.
The board, meeting two months after Muilenburg’s departure, also voted to slim down to 13 directors from 14. The Chicago-based company announced that Ed Liddy, who has been a Boeing director since 2010, and Mike Zafirovski, a director since 2004, would not stand for re-election and will retire from the board at the annual shareholder meeting.
©2020 Bloomberg L.P.