Boeing Co. Chief Executive Officer Dennis Muilenburg will waive his 2019 bonus and decline equity grants for at least a year until the grounded 737 Max fleet is flying again “in its entirety,” Chairman David Calhoun said.
Muilenburg retains the confidence of Boeing’s board and is the right person to get the troubled jetliner back in the air, Calhoun said in an interview Tuesday with CNBC. The Max, Boeing’s best-selling jet, has been banned from the skies since March, following two deadly crashes that killed 346 people.
“We’re going to support Dennis through this process,” Calhoun said. “From the vantage point of our board, Dennis has done everything right.”
Muilenburg suggested scrapping his bonus on Nov. 2, Calhoun said, days after an appearance in Congress in which angry lawmakers and the relatives of crash victims assailed the CEO’s compensation. Muilenburg also faced numerous calls to resign during two days of hearings.
Boeing climbed 1.7% to $357.03 at 9:38 a.m. in New York, the biggest gain on the Dow Jones Industrial Average.
Calhoun said that the current regulatory schedule suggests that “our airplane will get certified, and as we turn the year we can begin to move forward on getting these back in the air.” He said that while the relationship between Boeing and the Federal Aviation Administration over certification has delivered strong results, that wasn’t true for the Max.
“Reform has to happen. The system let everybody down,” he said. “If a rebalancing has to happen by way of reform, so be it. So be it. I get that.”
In crisp comments that contrasted with Muilenburg’s occasionally hesitant responses before Congress, Calhoun acknowledged that the control system implicated both crashes was flawed.
“No one was hiding anything. It was a set of engineering decisions that ended up being wrong,” he said. “There is no question the fundamental assumption we designed around was flawed with respect to how a pilot would react.”
Boeing will work to compensate customers for the disruption caused by the grounding, Calhoun said in response to questions about recent criticism from the CEOs of Southwest Airlines Co. and American Airlines Group Inc.
“There’s no question there will be settlements,” Calhoun said.
Muilenburg will likely lose out on at least $10 million — and possibly significantly more — as a result of the decision.
In 2018, the CEO received $20.4 million in short- and long-term cash bonuses and equity awards as part of a pay package that totaled $23.4 million, the company disclosed in a regulatory filing earlier this year. In the two previous years, those components amounted to $14.2 million and $11.6 million, respectively.
The CEO will presumably still get a salary, which was $1.7 million last year. He also received other taxable perks such as use of the company aircraft and life insurance premiums.
–With assistance from Richard Clough.
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