After two days of brutal, back-to-back grilling in Washington that, among other things, focused on the size of CEO Dennis Muilenburg’s compensation, the Boeing boss told the board of directors he would not be taking a bonus this year. But, then, neither are Boeing’s other managers.
According to a report in The Seattle Times, Boeing told its employees in an internal memo, “With only one quarter left in the year, the grounding since March of the 737 MAX and the associated financial effects have severely impacted the company’s performance by limiting the ability to deliver planes and collect on customer contracts. The company does not see a path to achieving an incentive payout for 2019.” Last year, Boeing employees in Washington state collectively took home almost $429 million in incentives, nearly $7000 per employee.
Muilenburg’s compensation was a hot topic on the day he testified before the U.S. House of Representatives’ Committee on Transportation & Infrastructure last week. Last year, Muilenburg was paid $23.4 million and earned $13.1 million in incentives. Several of the committee members questioned Muilenburg about his compensation and wondered why he hadn’t agreed to forfeit his salary after the two crashes the resulted in 346 deaths and the grounding of the 737 MAX. Several committee members also suggested Muilenburg should step down.
In response, Boeing Chairman Dave Calhoun told CNBC that Muilenburg will not lose his job. “From the vantage point of our board, Dennis has done everything right. Remember, Dennis didn’t create this problem. From the beginning, he knew that MCAS could and should have been done better and he has led a program to rewrite MCAS to alleviate all of those conditions that ultimately beset two unfortunate crews and the families and victims.”
The grounding has cost Boeing $9.2 billion, according to reports, and has depressed the planemaker’s stock value. It closed Tuesday at $358 per share, down from a high of $440 at the end of February. It’s likely that’s just the beginning of Boeing’s financial woes in the wake of the MAX accidents, with multiple lawsuits pending and givebacks expected with several carriers whose schedules have been disrupted from the grounding.
FAA Administrator Steve Dickson, in an op-ed appearing in USA Today, said, “The FAA is fully committed to address all of the recommendations raised by investigators, including those that pertain to when, whether or how the 737 Max will return to service. As we have said repeatedly, the aircraft will fly only after we determine it is safe.” That timeline is still in flux, though most airlines are predicting that the MAX will be cleared sometime in very late 2019.
