Boeing CEO David Calhoun missed out on a $7 million bonus last year, but still got a raise.
Boeing’s proxy filing Friday disclosed that when Calhoun started as CEO of Boeing in January of 2020, the board gave him a $7 million bonus package if he completed a list of goals by the end of 2023.
“The company has substantially achieved, or is on track to substantially achieve, most of these specific goals,” said the filing. But it’s clear one thing it will not do is get its new widebody jet, the 777X, into production and into service. The company announced in April of 2022 that it was pushing back the plane’s debut until 2025.
Because of that, the company’s filing said Calhoun will not get the $7 million.
However, the filing said the board is pleased with Calhoun’s performance and understands him falling short.
“The Board also recognizes that Mr. Calhoun has made several decisions concerning the management of the 777 program that were in the company’s long-term interest, but that contributed to that goal not being met,” said the filing. “The board recognizes and greatly appreciates Mr. Calhoun’s leadership and many actions over the last three years to navigate through a constantly changing environment to best position the company for the future, and without regard for the impact his decisions might have had on goals that were set prior to widespread onset of Covid and the changed regulatory environment.”
But even without the $7 million, Calhoun’s total compensation package increased to $22.5 million in 2022, up from $21.1 million in 2021.
And in February the board awarded Calhoun 25,000 shares of Boeing stock as a retention bonus. He is scheduled to receive that stock in two equal blocks — the first to be received one year after they were granted and the second received two years from the date they were granted. Those 25,000 shares were worth about $5.3 million on the date of the grant.
The new grant “reflects the board’s recognition of and continued confidence in Mr. Calhoun’s strong leadership, and is designed to help retain Mr. Calhoun as he continues to lead the work to position the company for the future.”
Boeing normally has a mandatory retirement age of 65 for Boeing executives, and Calhoun will turn 66 in April. But in April 2021, the company announced that its board of directors had extended the retirement age for Calhoun to age 70.
Boeing had another tough year financially. It reported its fourth straight annual loss, losing $6.6 billion, up from $5.5 billion a year earlier and more than $1 billion worse than expected by analysts at the time of the report.
And Boeing management’s performance has been publicly criticized by some of its major customers. In May last year, Michael O’Leary, CEO of Ryanair — Europe’s largest discount carrier, which has ordered nearly 400 jets from Boeing since 2010 — let loose a profanity-laced criticism of Boeing management.
“At the moment we think Boeing management is running around like headless chickens, not able to sell aircraft, and then even the aircraft they deliver, they’re not able to deliver them on time,” he said on an earnings call. He said company executives need either an immediate “reboot, or a boot up the a**.”
“Either the existing management needs to up its game, or they need to change the existing management, would be our view of life,” he said. “We’re very happy to work with existing management but they need to bloody well improve on what they’ve been doing delivering to us over the last 12 months.”
And O’Leary isn’t the only major customer to criticize Boeing management.
Domhnal Slattery, the CEO of Avolon, one of the world’s leading aircraft leasing companies, suggested in May that Boeing needs a change in culture — and maybe leadership.
“I think it’s fair to say that Boeing has lost its way,” Slattery said at the Airfinance Journal conference, in comments first reported by Reuters and confirmed by Avolon. “Boeing has a storied history… They build great airplanes. But it’s said that culture eats strategy for breakfast and that is what has happened at Boeing.”
Boeing declined to comment on those key customers’ remarks.