Boeing Board Extends Retirement Age for CEO David Calhoun -- 3rd Update
April 20 2021 - 1:11PM
Dow Jones News
By Andrew Tangel
Boeing Co.'s board on Tuesday cast a vote of confidence in Chief
Executive David Calhoun by extending his job for up to five years
and said it is searching for a new chief financial officer.
The aerospace giant said Greg Smith, who was considered a
leading internal candidate for the top job, will retire in July
after serving as finance chief for a decade and briefly serving as
interim CEO before Mr. Calhoun took over in January 2020.
The leadership moves come as Boeing is under continued pressure
stemming from two fatal crashes of its 737 MAX passenger jet and
slumping demand for new airplanes amid the Covid-19 pandemic. The
manufacturer's commercial, defense and space divisions also face a
host of quality problems, and Mr. Calhoun has presided over efforts
to overhaul how Boeing handles engineering and safety matters.
Mr. Calhoun, 64 years old, faces a new mandatory retirement age
of 70, rather than the company's typical age of 65. Mr. Calhoun, a
director since 2009, is among Boeing's longest-serving board
members. He previously served as lead director and chairman.
Without the extension Mr. Calhoun would have had to retire April
2022. The company said Tuesday there wasn't a fixed term with Mr.
Calhoun's employment.
Chairman Larry Kellner said Boeing had "effectively navigated
one of the most challenging and complex periods" in the company's
history during Mr. Calhoun's tenure. The Wall Street Journal
reported last week that the board was considering extending the
retirement age and Mr. Calhoun had floated the possibility.
Mr. Smith, 54, has worked at Boeing for about 30 years. While he
most recently served as finance chief, he amassed responsibilities
overseeing various company operations during the 737 MAX crisis.
The two crashes, which claimed 346 lives, led to a nearly two-year
grounding of the aircraft that is estimated to cost the company
about $20 billion. Mr. Smith was deeply involved in Boeing's
efforts to return the 737 MAX, a top moneymaker, to service and
borrow billions of dollars to aid the company as the pandemic
worsened.
Boeing's leadership and board have faced several shake-ups in
the past two years. In late 2019, the board ousted Dennis
Muilenburg as CEO, installing Mr. Calhoun in the top job. Seven
directors who were on the board when the second 737 MAX crashed
have left. The company has four new directors.
Shareholders on Tuesday re-elected Boeing's slate of 10
directors, Mr. Kellner said during the company's annual
meeting.
One proxy advisory firm, Glass Lewis, had recommended that
shareholders vote against Mr. Kellner and Edmund Giambastiani,
another longtime director who leads a new safety committee on the
board. The firm cited their previous service on the board's audit
committee, which oversees major risks facing the company. Another
proxy firm, Institutional Shareholder Services Inc., recommended
shareholders vote for Boeing's slate of directors, giving the
company credit for board and management changes and reforms to its
safety and compliance processes.
Messrs. Kellner and Giambastiani received more than 80% of
shareholder votes cast this year, garnering more support than they
did last year, according to a person familiar with the preliminary
vote tally.
Boeing has made progress in overcoming some of its business
problems. It recently reached a deal to sell 100 more 737 MAX jets
to Southwest Airlines Co. and resumed deliveries of the wide-body
Dreamliner in March after a five-month halt. Challenges remain,
including earlier this month when airlines removed dozens of newly
built 737 MAX jets from service after Boeing flagged a potential
electrical problem, just months after carriers began flying them
again. Boeing said it was working with the Federal Aviation
Administration on resolving the issue.
Mr. Calhoun on Tuesday said he believed proposed fixes for the
MAX's electrical issues would be rolled out in a "relatively short
order," but added that regulators controlled the timing. Once
scheduled, he said, the fixes should take days, not weeks or
months.
Mr. Smith, who was appointed Boeing's chief financial officer in
2011, lasted in the role longer than many of his peers at other
companies in the S&P 500 and Fortune 500. Tenure in the
position for the group averaged 4.9 years in 2020, roughly in line
with previous years but down from an average of 5.2 years in 2015,
according to the Crist Kolder volatility report tracking executive
moves at large U.S. companies.
--Nina Trentmann contributed to this article.
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
April 20, 2021 12:56 ET (16:56 GMT)
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