Boeing Rebuked by Investors in Vote to Split CEO, Chairman Roles

(Bloomberg) -- A majority of Boeing Co. shareholders voted to separate the chief executive officer and chairman roles permanently, sending a rebuke to the planemaker’s leadership at its annual general meeting.

The proposal for an independent chairman, which was opposed by management, garnered 52% of shareholder votes, Boeing said Monday. A measure that would have allowed investors to raise matters outside the normal annual meeting cycle got 43% of votes in favor -- an unusually high level of support for an initiative not recommended by company leaders.

While the votes aren’t binding, they sent a clear message to the board that large institutional shareholders want more accountability after two deadly crashes of Boeing’s 737 Max plunged the company into a deep crisis. The board had resisted calls to require an independent chairman even after establishing an outsider, Larry Kellner, in that role as part of a shakeup following Boeing’s botched handling of the accidents.

“Shareholders want greater oversight of Boeing management,” shareholder activist John Chevedden said in response to the vote. Breaking with tradition, the session was held online due to the Covid-19 pandemic.

While splitting the chairman and CEO roles has gained popularity at other leading U.S. companies, Boeing’s directors warned in the 2020 proxy statement that the measure would “impose irrevocable limits on the board’s future flexibility.” After the vote, Kellner said the company would take the advisory votes into account.

‘Ongoing Dialog’

“We’ll continue to use your feedback to inform decision-making going forward,” he said. “I thank the shareholders for input and ongoing dialog we have with them.”

Boeing’s slate of director nominees was re-elected at the meeting, despite taking fire for being slow to intervene as the company spiraled into crisis after regulators grounded the 737 Max, the company’s biggest source of revenue.

Kellner responded to another criticism -- the shortage of aerospace experience on the board -- by vowing to recruit more directors with an engineering background.

Proxy adviser Glass Lewis & Co. had recommended that Boeing shareholders not re-elect Kellner, who until recently led a committee tasked with risk management. Institutional Shareholder Services Inc. had also urged investors to vote against Arthur Collins, Edmund Giambastiani, Susan Schwab, and Ronald Williams for failing in their oversight of the Max crisis.

During the session, Dave Calhoun, a long-time director who stepped in as CEO in January, warned that the Chicago-based company faces a shrinking commercial market from a global pandemic, and uncertainty regarding when the situation will stabilize. Air travel won’t return to 2019 levels for at least two to three years, crimping demand for jetliners, he said.

“As the industry recovers, slowly at first and then with greater vigor, we’ll be ready with a diverse portfolio of products and services that our customers want and need,” he said.

©2020 Bloomberg L.P.