Boeing Shareholders pressed hard at the aircraft makers’ shareholder meeting Friday, asking the board how it could justify the CEO’s $33 million compensation plan and whether Boeing’s culture could be changed. reorganize around safety in the manufacturing process.
Investor concerns offer a behind-the-scenes view of Boeing’s battle on all fronts: A whistleblower testified before Congress last month that He was told to ‘shut up’ after raising security concerns in meeting ; two Boeing whistleblowers are dead successively; CEO Dave Calhoun will leave at the end of the year and there is no obvious successor to take his place; other airlines ask Boeing for reimbursement for late plane deliveries; And, the Department of Justice plans to file a complaint of fraud against the company. Additionally, the stock price is down 29% year to date, making Boeing the second worst performing company in the S&P 500 Index.
The timing couldn’t be worse for Friday’s annual shareholder meeting and Boeing stuck to crisis management 101: Chairman Steven Mollenkopf remained calm but provided almost no real details on progress of the search for the company’s CEO.
Yet shareholders paid their price, launching scathing questions about the effectiveness of the board and its key decisions – an uncomfortable position for a company that can boast a large number of current and former CEOs from such sectors. Fortune 500 companies like Amgen, Global carrier, Duke Energyand others in private equity.
A Boeing spokesperson declined to comment. Fortune on the acuteness of the questions.
An investor asked about the process of finding a new CEO to lead this complex $112 billion company. Mollenkopf, who is leading the research, said almost nothing about the timeline or criteria, but said he had met with investors and customers to get their feedback.
“We will announce the new CEO once we have completed a thorough and thoughtful process,” he said.
Calhoun read prepared remarks aloud. He said Boeing has added more quality controls, including at its suppliers. In response to a shareholder question about safety, Calhoun added that the company is increasing training for new employees and simplifying some of its processes to avoid defects. Whistleblowers reported a culture of retaliation at Boeing for those who raise safety concerns, but Calhoun added that the company responds to them with investigations and stricter enforcement of its non-retaliation policy.
“We will measure our progress, one plane at a time,” he said in his prepared speech.
While management’s proposals are generally approved with unanimous support, shareholder opposition began even before the meeting, increasing the challenges the struggling aircraft maker has faced following an incident in January at during which a door plug flew off an Alaska Airlines plane in mid-flight. After the Alaska debacle, Boeing significantly revamped its compensation plan to incentivize executives for safety and quality and paid no bonus to Calhoun at his request, according to the company’s proxy statement.
But that wasn’t enough, at least for some of its shareholders.
Before the meeting, some investors protested Calhoun’s reelection to the board and approval of his $33 million compensation package. Proxy advisor Glass Lewis & Co. recommended shareholders vote against Calhoun’s reelection, along with two other directors, Akhil Johri and David Joyce, who chair Boeing’s audit and aerospace safety committees, respectively.
Glass Lewis said a vote against Calhoun and the other directors “would strongly signal dissatisfaction with the company’s oversight of its safety culture and its efforts to transform that culture, which we believe have not progressed quickly enough…”
Proxy Adviser Institutional Shareholder Services (ISS) recommended shareholders vote against Calhoun’s giant compensation package because of the big increase it saw last year, Bloomberg Law reported. Calhoun’s salary jumped 45% to $32.8 million, according to the company’s proxy statement.
“While the committee provided a rationale, it was not considered particularly compelling for such a large increase, especially given two other recent increases since Calhoun became CEO in 2020.”
Despite objections, both proposals were approved based on the preliminary results of the meeting.
This story was originally featured on Fortune.com
