Boeing Board Extends Retirement Age for CEO David Calhoun -- 2nd Update
By Andrew Tangel
Boeing Co. 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 leadership moves come as Boeing is under continued pressure
stemming from two fatal crashes of its 737 MAX and plunge in 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.
Boeing said Greg Smith, who was considered as a potential
successor to the top job, will retire in July after serving as CFO
for a decade and briefly serving as interim CEO before Mr. Calhoun
took over in January 2020.
Mr. Calhoun, 64 years old, will now face 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 and served as lead director and
chairman before becoming CEO last year.
Without the extension Mr. Calhoun would face retirement in 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.
Mr. Smith has worked at Boeing for about 30 years. While he most
recently served as the company's financial 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 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
Boeing's leadership and board have faced several shake-ups in
the past two years. In late 2019, the board ousted then-CEO Dennis
Muilenburg, installing Mr. Calhoun in the top job. Seven directors
who were on the board when the second 737 MAX crashed have left or
will depart by Tuesday. The company has four new directors.
Shareholders on Tuesday are slated to meet and vote on Boeing's
slate of 10 directors.
One proxy advisory firm, Glass Lewis, has 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 the
company's safety and compliance processes.
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. However, there are
challenges, 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. Smith, who was appointed as Boeing's CFO in 2011, outdid
many of his peers at other companies in the S&P 500 and Fortune
500 with regards to the length of his tenure. Finance chiefs at
these companies held the role for an average of 4.9 years in 2020,
broadly in line with previous years but down from 2015, when the
average CFO-tenure was 5.2 years, according to the Crist Kolder
volatility report tracking executive moves at large U.S.
--Nina Trentmann contributed to this article.
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
April 20, 2021 10:35 ET (14:35 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.