Dave Calhoun, CEO of Boeing in the 2023 financial period, received nearly 33 million US dollars in compensation despite the fact that the aircraft manufacturer was also facing tough times.
Calhoun’s biggest source of income is coming from stocks, but they depreciated in value because of a mid-air crash with a Boeing panel in January. Despite a drop of nearly 30% for Boeing shares since that incident, his total compensation for 2023 of about $24.8 million was still up because of a reduction in stock prices.
However, this does not prevent Calhoun from announcing that he is stepping down at the end of this year in March. By 2023’s end, his prospective retirement benefits were estimated to be worth over $44 million based on regulatory filings.
The manufacturing of 737 MAX, one of Boeing’s most popular planes, has recently witnessed a slow-down because of increased inspection by U.S. authorities and the on-going improvement of the quality. On the other hand, Airbus, the European rival of Boeing, has become more popular in the market for the single-wide body planes.
This forced Boeing to make many changes in the board leadership, when both Larry Kellner and Stan Deal resigned their position as board chair and head of the commercial planes division respectively. As Chief Operating Officer, Stephanie Pope is now managing that area of the business.
Steve Mollenkopf, Boeing’s new board chair, assured shareholders in a recent filing that the company is committed to overcoming these challenges: “I promise that I personally, and we as a board will leave no stone unturned in our efforts to get this company to where it needs to be.”
In 2023, Calhoun earned a $5 million salary (instead of the $2.8 million bonus which he opted not to take). Compared to the previous year, his earnings were the same, amounting to $7 million. However, Calhoun had not taken a bonus for the last 3 years.
To solve the stock price slump, Boeing’s board has the long-term award reduced for executives. Thus, CEO Calhoun’s $13.25m award payment for the year 2024 is gradually replaced from $17 million, which is the target amount. This indicates a shift from earlier times as compared to the previous fiscal year which was $21.25 million.
After the fatal crashes that occurred on the 737 MAX, Boeing overhauled its compensation system to ensure that product safety and quality were the main focus. For 2024, safety and quality will be taken with a higher scale in the yearly incentives of the sales and marketing becoming the top priority unlike focusing primarily on finance performance.
Boeing is more into creating a safety culture, introducing new metrics for long-term executive compensation whereby employee surveys will be introduced and it will be a measure of adherence to safety protocols. In February, an independent panel had pointed out a “disconnect” between senior management and employees on safety culture, resulting in the implementation of additional quality checks throughout Boeing’s facilities.
Despite the ongoing problems, Boeing is still determined to fixing the trust issues and to improve safety standards across all operations in order to regain the confidence of the regulators and the customers.
