Boeing’s annual meeting on Friday comes amid an extremely difficult period for the crisis-hit company, creating the potential for drama at an event that is usually a snooze-fest.
The company, under heavy regulatory scrutiny after recent safety and quality control problems, has rejected shareholder proposals at previous annual meetings that typically last an hour or less.
While Boeing brass will no doubt want another low-key affair on Friday, the company faces at least a greater chance of a shareholder rebuke after recommendations from top shareholder advisory firms target outgoing CEO Dave Calhoun.
Calhoun, who faced tough questions after a near-disaster Alaska Airlines flight in January, will step down as CEO at the end of 2024 but has been reappointed to the board.
But consulting firm Glass Lewis wants shareholders to reject Calhoun’s nomination, while Investor Shareholder Services recommended a no on Calhoun’s compensation package, which has reached $33 million for 2023.
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A recent Boeing presentation highlighted the expanded role of new chairman Steve Mollenkopf, the former Qualcomm chief who will oversee the CEO search.
“We are committed to ensuring that every Boeing airplane meets the highest standards of safety and quality,” said a Boeing shareholder presentation that reiterated support for Calhoun and his compensation package.
Send Message
Glass Lewis said shareholders should use the annual meeting to send a message to Boeing.
“We have significant concerns about the board’s oversight of the Company’s safety culture and efforts to review it,” said a report that urged investors to vote against the re-election of Calhoun and Akhil Johri and David Joyce, who chair the audit committees and aerospace security respectively. .
The board “will understand the implications of a shareholder vote against the outgoing CEO and the company’s key managers by overseeing the safety and risk culture,” the report said. “Shareholders will send a clear signal of dissatisfaction with the Company’s recent oversight and handling of safety issues and safety culture.”
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The Glass Lewis report acknowledged that other Boeing board members on the safety committee have “extensive, critical expertise in risk management and aviation safety” and that voting against the entire group “would not be in the long-term interests of shareholders.”
ISS, meanwhile, urged a no vote on Calhoun’s executive pay package.
Under the plan, Calhoun received a base salary of $1.4 million, plus more than $30 million in stock awards. Calhoun turned down a potential $2.8 million bonus in the wake of the Alaska Airlines crash, the company said in a securities filing.
In crafting Calhoun’s package, Boeing referenced past crises he navigated as CEO, including regulatory approval to return the 737 MAX to the skies after two fatal crashes and the turmoil of the Covid-19 pandemic.
“While the accident of Alaska Airlines Flight 1282 shows that Boeing still has a lot of work to do, the Board believes that Mr. Calhoun responded to this event in the right way by taking responsibility for the accident, cooperating transparently and proactive action with regulators and customers and taking significant steps to strengthen Boeing’s quality assurance,” Boeing said in the filing.
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But ISS said the executive compensation package should be rejected because it included an increase in Calhoun’s potential long-term incentive award for the third year in a row.
Boeing said the boost was “designed to focus our leadership team at a pivotal time in our Company’s turnaround,” including enabling Boeing to meet its long-term financial goals.
However, ISS dismissed the argument as “not particularly compelling … especially considering two other recent raises since Calhoun became CEO in 2020.”
Source: AFP