Boeing’s outgoing CEO Dave Calhoun experienced a significant decrease in his take-home pay, dropping to $5 million last year from $7 million in 2022. This decrease came as Calhoun declined a bonus due to the prolonged safety crisis surrounding the company’s best-selling jetliner, the 737 Max. While his total compensation increased by 45% to $32.8 million in the prior year, Boeing stated that his 2023 sum is closer to $25 million, factoring in long-term incentives like stock. This decrease in compensation reflects the challenges Boeing has faced in the aftermath of the safety crisis.
In response to the safety crisis, Boeing has initiated a leadership shakeup, with Calhoun announcing his plans to step down by the end of the year. The company also replaced its chairman and head of the commercial airplane unit in an effort to address the challenges it is facing. The company disclosed executive compensation in a filing, highlighting a bonus Calhoun declined in 2023, valued at $2.8 million. Boeing stated that it will now more closely tie executive compensation to safety goals, emphasizing the importance of prioritizing safety in its operations.
The safety crisis surrounding the 737 Max, compounded by the impact of the Covid-19 pandemic on the aviation industry, has presented significant challenges for Boeing. The company has faced quality defects on its aircraft, leading to slowed deliveries of new planes to customers. The Alaska Airlines incident, where a door plug panel blew out midair from a 737 Max, has further exacerbated Boeing’s issues. As the Justice Department investigates the incident and the Federal Aviation Administration imposes limitations on Boeing’s 737 Max production, the company is under increased scrutiny to address safety concerns.
Boeing has announced a shift in its operational performance metrics, with a stronger emphasis on quality and safety goals. The company indicated that executive incentives could potentially be reduced to zero if these goals are not met. This change in approach reflects Boeing’s commitment to enhancing safety measures and addressing the challenges it has faced in recent years. By aligning executive compensation with safety goals, Boeing aims to create a culture of accountability and prioritize safety in its operations.
Boeing’s financial performance has been affected by the safety crisis and the challenges it has encountered in recent years. The company has stated that it will burn more cash than previously expected, with shares of the planemaker down almost 30% this year. As Boeing prepares to release its first-quarter results, there is heightened uncertainty surrounding its financial outlook. Boeing last posted an annual profit in 2018, underscoring the financial implications of the safety crisis and other challenges the company has faced.
The safety crisis surrounding the 737 Max has had a significant impact on Boeing’s CEO compensation, reflecting the broader challenges the company has faced in recent years. By addressing safety concerns, implementing leadership changes, and aligning executive compensation with safety goals, Boeing aims to navigate the crisis and position itself for long-term success.