By Allison Lampert and Abhijith Ganapavaram
(Reuters) – The 2023 pay package of Boeing (NYSE:)’s CEO, who recently announced his departure in the midst of a safety crisis, rose about 45% to nearly $33 million, the U.S. planemaker said on Friday.
However, Boeing said that much of CEO Dave Calhoun’s compensation is in deferred stock that has fallen in value following a January mid-air panel blowout.
The adjusted value of Calhoun’s total 2023 compensation is $24.8 million, the company said in a regulatory filing. Boeing shares have tumbled nearly 30% so far this year as the company wrestles with quality concerns from regulators and customers following the Jan. 5 blowout on an Alaska Airlines 737 MAX 9 jet.
Calhoun announced on March 25 that he will step down from the top job by year-end. In 2022, he received $22.6 million in total compensation, according to the filing.
Production of Boeing’s strong-selling 737 MAX has slipped in recent weeks as U.S. regulators step up factory checks and the planemaker seeks to boost quality. In the meantime, European rival Airbus has extended its lead in the market for single-aisle jets.
The crisis led to a broad management shakeup with Boeing board chair Larry Kellner and Stan Deal, head of the company’s commercial planes business, also leaving. Chief Operating Officer Stephanie Pope has replaced Deal.
The board’s new chair, Steve Mollenkopf, told shareholders in Friday’s filing: “I promise that I personally, and we as a board will leave no stone unturned in our efforts to get this company to where it needs to be.”
Calhoun took home $5 million in pay in 2023 after declining to be considered for his $2.8 million bonus, compared with $7 million in 2022. Earlier filings show Calhoun did not receive a bonus over the last three years.
Deal earned $2.6 million in actual pay in 2023 and his total compensation jumped 42% to $12.5 million, although Boeing estimates the current value at $9.7 million.
Boeing’s board also decided this year that the value of long -term executive officer awards would be reduced by the percentage decline in the company’s stock price since the blowout and the 2024 award date.
Due to that reduction, Calhoun will receive an award of $13.25 million in 2024, compared with a target of $17 million. A year earlier, the award was $21.25 million.
In the wake of two separate 737 MAX crashes in 2018 and 2019 that killed a combined 346 people, Boeing had revamped its compensation policies to emphasize product safety and quality when deciding individual executive pay and incentives.
Long-term executive incentives are being linked to improving safety and quality. In 2024, for Boeing’s commercial airplanes, safety and quality will be assigned a weighting of 60% when deciding annual incentives, compared with a 40% weighting for financial performance.
Long-term incentive awards for Boeing’s executive officers will also include new metrics, such as one mandating an employee culture survey to assess how effectively the company’s safety management system is understood and followed.
In February, an expert panel reviewing Boeing’s safety management processes found a “disconnect” between the planemaker’s senior management and employees on safety culture.
The planemaker has stepped up quality checks at its factories and has said it is working hard to address customer and regulatory concerns.
