Boeing will not cancel CEO incentive award tied to 737 MAX return
Boeing Co (BA.N) told U.S. lawmakers it will not cancel an incentive award for its new chief executive tied to the return of its grounded 737 MAX despite criticism from Congress, according to a letter made public on Tuesday.
David Calhoun, who took over as Boeing chief executive last month, is receiving a $1.4 million annual salary and is eligible for long-term compensation of about $26.5 million, including a $7 million bonus if he achieves several milestones. The milestones include the return to service of the 737 MAX which was grounded in March 2019 after two fatal crashes that killed 346 people.
Boeing defended the award and noted it is subject to a new clawback policy that applies to misconduct that compromises the safety of Boeing products. It also said Calhoun must serve for multiple years to receive the award.
“We believe tying our new CEO’s incentive-based compensation to key strategic objectives, including the safe return to service of the 737 MAX, is in the best interest of our company, our workforce, and the flying public,” Boeing government operations executive vice president Tim Keating wrote in a Jan. 23 letter to the lawmakers.
Democratic U.S. Senators Edward Markey, Richard Blumenthal and Tammy Baldwin said in a statement on Tuesday that Boeing’s response was “completely inadequate.” They added that if the planemaker “really wants to prove it has learned its lesson about prioritizing safety over profit, then it will cancel the proposed bonus immediately and make sure there is no financial incentive for its new CEO to rush the 737 MAX back into the sky.”
Boeing rejected the suggestion that it is rushing the MAX back into service, reiterating in its letter that its best estimate is that the MAX will not be ungrounded until mid-2020 and that regulators will determine the timing.