BA Boeing Co

By Andrew Tangel and Doug Cameron 

Boeing Co. said it nominated two new outside directors with safety and engineering experience, amid scrutiny of the board's oversight of the prolonged 737 MAX crisis.

The aerospace giant said Monday that it had nominated former United Technologies Corp. finance head Akhil Johri and Qualcomm Inc. Chief Executive Steve Mollenkopf to Boeing's board. The two would replace longtime directors Edward Liddy and Mike Zafirovski, who Boeing said would step down from the board after the company's annual meeting in April.

Boeing's board has come under scrutiny from U.S. lawmakers and investors for its role overseeing the launch of the MAX nearly a decade ago and its reaction to two crashes that claimed 346 lives.

Aviation industry officials and some shareholders have asked why it took the board until late December to oust Dennis Muilenburg as CEO, nine months after the second MAX crash in Ethiopia last March.

The additions announced on Monday, along with the arrival last year of former U.N. Ambassador Nikki Haley and retired Navy Admiral John Richardson, would mean a third of Boeing's 13-person board has turned over in the past year.

The board decided against other potential changes, such as adding seats or imposing tenure limits. Chairman Larry Kellner said the new board members would bring fresh perspective while retaining the experience of long-tenured directors.

"We just feel like this is the right balance after a lot of debate," Mr. Kellner said in an interview.

Regulators banned the MAX from flying last March. The protracted grounding as Boeing works on software fixes and establish a training protocol that will win the approval of regulators has plunged the company into turmoil. Boeing halted the aircraft's production in January, and potential costs and charges have approached $20 billion.

Mr. Kellner defended the board's handling of the MAX crisis, noting it established a safety committee after the second MAX accident and later ousted first Boeing's commercial-airplane division chief and then Mr. Muilenburg.

About half of the company's 13 directors have held board seats for about a decade or longer, including new CEO David Calhoun, a director since 2009. Mr. Kellner has been a member since 2011, and six were in place when the company decided in 2010 to launch the MAX.

Mr. Calhoun once ran General Electric Co.'s aircraft-engine business, and Mr. Kellner was CEO of Continental Airlines before the merger that created United Airlines Holdings Inc. Others on the board hail from other heavily regulated industries such as insurance and energy.

Boeing's board is likely to be a focus during proxy season in coming weeks, according to some investors and advisory firms. The company is expected to file its latest governance documents with securities regulators next month ahead of the April shareholder meeting.

No one filed nominations for a competing slate of directors this year. But the board could nonetheless face symbolic actions. Last year proxy advisory firm Glass Lewis recommended voting against Mr. Kellner, the head of the board's audit committee. The firm said the MAX accidents "indicate a potential lapse in the board's oversight of risk management."

"They're doing their best to put this controversy behind them, but it remains to be seen if that will be accomplished," Kern McPherson, a vice president of research and engagement at Glass Lewis, said in a recent interview.

Last fall, Boeing's board added a board-level safety committee as part of a broader revamp of how the company handles design and safety matters. The revamp is aimed at giving senior company leaders and directors tighter oversight, as well as reduce the influence of schedules and cost pressures on engineering decisions.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

February 24, 2020 16:19 ET (21:19 GMT)

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