Who can fire a boeing ceo

Boeing fired CEO Dennis Muilenburg Monday morning, amid the continued fallout over two crashes of its best-selling plane, the 737 Max, that killed 346 people last year.

Boeing CFO Greg Smith will serve as interim CEO until Jan. 13, when David Calhoun, the company’s current board chair will take over the chief executive job. Boeing stock is up approximately 2 percent Monday in the wake of the news.

“Dave has deep industry experience and a proven track record of strong leadership, and he recognizes the challenges we must confront,” Lawrence Kellner, non-executive chairman of the board, said in a statement. “The Board and I look forward to working with him and the rest of the Boeing team to ensure that today marks a new way forward for our company.”

Boeing said today that “a change in leadership was necessary to restore confidence in the Company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders.”

The 737 Max planes have been grounded since March, several months after the two catastrophic crashes in Indonesia and Ethiopia killed hundreds of passengers and raised deep questions about the planes’ safety. Since that time, regulators have launched multiple investigations into the development and certification of the planes.

Last month Boeing announced it would suspend production of 737 Max jets starting in January and move the people working on them to other teams.

Investigators traced the root cause of the crashes to an automatic control system that pushed the planes into deep, unrecoverable dives due to faulty sensor data. Boeing says it has developed a software patch that should resolve the problem, but the Federal Aviation Administration has not yet signed off on the fix.

Over the weekend, Boeing had to cut short a test flight of its CST-100 Starliner space taxi due to a glitch with the craft’s timing system. Because of the glitch, NASA and Boeing had to forgo Starliner’s planned trip to the International Space Station. But the uncrewed transport still notched a first in space history nevertheless by becoming the first crew-capable U.S. space capsule to make its return from orbit on land.

Muilenburg is a Boeing lifer, who has been with the company since 1985, starting as an intern. He became CEO in 2015. In April, Muilenburg rebuffed the idea of resigning over the 737 Max issues.

Boeing’s 2019 proxy statement to shareholders reports that Muilenburg’s total compensation last year amounted to $30 million — including a $1.7 million salary, $5.4 million in annual incentives, $7.6 million in long-term incentive payouts and $15.3 million in stock award vesting.

That’s more than twice the median compensation for CEOs at the biggest U.S. companies, based on a Wall Street Journal/MyLogIQ survey. But it pales in comparison with the $129.4 million paid to the top CEO on the list for 2018, Discovery Inc.’s David Zaslav.

Boeing’s statement says Muilenburg could be paid as much as $39 million upon termination of employment. The actual figure is highly dependent on performance payments and the company’s share price.

Muilenburg’s cash severance is listed at $6.6 million, and the total estimate of $39 million is based on Boeing’s share price at the end of 2018. The price is actually higher now than it was then, but the performance payout might be lower than previously estimated — so we’ll have to wait for a future financial statement to see how it all gets sorted out.

Update for 4:53 p.m. PT Dec. 23: We’ve added details about Muilenburg’s compensation.

By David Shepardson, Tracy Rucinski

(Corrects to remove reference to Muilenburg’s age, paragraph 2)

Jan 10 (Reuters) - Boeing Co’s ousted chief executive officer, Dennis Muilenburg, stands to receive $62 million in long-term incentive, stock awards and pension benefits, but forfeited $14.6 million and will receive no severance, the planemaker said in a regulatory filing on Friday.

Muilenburg was fired from the job in December as the company failed to contain the fallout from a pair of fatal crashes that halted output of its bestselling 737 MAX jetliner and tarnished its reputation with airlines and regulators.

He was replaced by Boeing board chairman David Calhoun, 62, a turnaround veteran and former General Electric Co executive who has led several companies in crisis.

Calhoun, who starts as CEO on Monday, will receive a base salary at an annual rate of $1.4 million and is eligible for $26.5 million in long-term incentive compensation, Boeing said in a filing.

Boeing said in November Muilenburg had volunteered to give up his 2019 bonus and stock awards. For 2018, his bonus and equity awards amounted to some $20 million, according to filings.

“Upon his departure, Dennis received the benefits to which he was contractually entitled and he did not receive any severance pay or a 2019 annual bonus,” Boeing said in a statement.

The 737 MAX has been grounded since March. The deadly accidents in Indonesia and Ethiopia within five months killed 346 people.

The severance disclosure follows Boeing’s release late on Thursday of hundreds of internal messages that contained harshly critical comments about the development of the 737 MAX, including one that said the plane was “designed by clowns who in turn are supervised by monkeys.”

Speculation that Muilenburg would be fired had been circulating in the industry for months, intensifying in October when the board stripped him of his chairman’s title - although he had also twice won expressions of confidence from Calhoun.

Boeing also disclosed that Kevin McAllister, who was fired as CEO of Boeing Commercial Airlines in October, forfeited $52.9 million in unvested equity awards and other compensation.

Reporting by David Shepardson in Washington and Tracy Rucinski in Chicago; Additional reporting by Ankit Ajmera in Bengaluru and Eric M. Johnson in Seattle Editing by Shounak Dasgupta and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

Boeing CEO David Calhoun has presided over a series of missteps that would have caused almost any chief executive to lose his job. Yet, he remains at the helm of the commercial aircraft and defense equipment manufacturer. Calhoun has held the job since 2020.

In the past two years, Boeing’s shares are down 3%. Over the same period, the S&P 500 is up 41%. The stock plunged much more than that in December 2020. Its workhorse Boeing 737 Max was grounded from March 2019 to December 2020 because of two deadly crashes. Calhoun was appointed in January 2020, primary to solve Boeing’s lax manufacturing process. However, he has been criticized because he has been on the board, which apparently missed some of Boeing’s most troubling issues, since 2009.

Boeing has had other problems during Calhoun’s time in his job. The 737 Max was grounded again. Production problems with the 787 Dreamliner began to drag on commercial sales.

Calhoun cannot be blamed for the extreme trouble Boeing encountered during the COVID-19-driven drop in air travel.

Calhoun does get the blame for sales gains by rival Airbus. As The Wall Street Journal reported in July of last year: “A year and a half into his tenure, new snags keep popping up.” Among the additional damage to Boeing has been its inability to compete with Elon Musk’s SpaceX, which has become by far the dominant means to send people and satellites into space.

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Calhoun said earlier this year “I will be the first to admit that they were not events caused by the outside world, but unfortunately, missteps inside.” That should be enough for the board to force his exit.