Boeing’s Board of Directors issued a proxy statement prior to the upcoming annual shareholders meeting on April 18, 2023, detailing the company’s results in 2022, including the compensation paid to its chief executives.
In the statement’s opening words, Lawrence Kellner, an independent chair of Boeing, said: “In 2022, we continued to make significant progress in ensuring that our culture, processes and systems always meet the highest standards. Despite difficult macroeconomic factors, we are overcoming the challenges of recent years, de-risking our business, and restoring the operational and financial strength you expect from Boeing.”
Kellner highlighted that in 2022, the company finally achieved a positive net cash flow.
“Safety remains paramount and we have taken actions across Boeing to strengthen our safety culture further and to meet our obligations to those who depend on the safety of our products,” Kellner said.
Calhoun managed to lead the manufacturer toward the goal, which was the first year the manufacturer managed to record a positive net flow since 2018. However, the CEO missed out on a supplemental award as he failed to deliver the 777X into service by the end of 2023.
The statement read: “Nonetheless, one of the goals was the successful entry into service and production/delivery ramp-up of the 777X by December 31, 2023. It is clear that this goal will not be met, albeit for reasons largely beyond Mr. Calhoun’s control.”
“Notwithstanding this decision, which the Compensation Committee believes is compelled by the clear terms of the supplemental award, the Board recognizes and greatly appreciates Mr. Calhoun’s leadership and many actions over the last three years to navigate through a constantly changing environment to best position the Company for the future, and without regard for the impact his decisions might have had on goals that were set prior to widespread onset of COVID and the changed regulatory environment,” the statement continued.
Other goals Calhoun is to achieve by the end of 2023 include the safe return to service of 737 MAX-7 and MAX-10 aircraft, realignment of engineering functions, a crewed Starliner flight, defense program-related goals, and the execution of the Boeing Global Services (BGS) long-range business plan.
Calhoun was also given the goal of leading and achieving certain milestones related to a joint venture with the Brazilian aircraft manufacturer Embraer. However, Boeing terminated the agreement in April 2020, citing Embraer’s failure to “satisfy the necessary conditions”.
These goals were established when Calhoun was hired in 2020 and these performance-based Restricted Stock Units (RSU), a type of compensation paid out to a company’s employees in stock, had a grant date value of more than $7 million. His base salary of $1.4 million was not adjusted in 2022, while Calhoun’s annual incentive target of $2.8 million for 2022 grew to $3.4 million, per the Compensation Committee’s decision in February 2023.
Calhoun replaced former Boeing CEO Dennis Muilenburg in January 2020, when Muilenburg failed to guide the company’s best-selling product, the 737 MAX, back into service following the groundings in March 2019. Muilenburg was fired in December 2020.