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Boeing investors expressed their displeasure with Chief Executive Officer Dave Calhoun on Friday, casting major protest votes against his pay package and re-election to the board, but failing to block them.
Although largely symbolic, the votes at the company’s annual meeting marked one of this year’s largest revolts against the CEO of a Dow Jones Industrial Average company. A refusal of this magnitude during a corporate vote is a sign of significant frustration on the part of shareholders.
More than a third of investors withheld approval in an advisory vote on executive pay. Calhoun was set to receive $32.8 million this year, a 45 percent increase, but 35 percent of shareholders opposed it. And 22 percent voted against his continuation as director of the aircraft manufacturer, which is struggling to address safety and quality problems.
Calhoun previously announced plans to step down as CEO at the end of the year. Boeing did not immediately comment on the results of the vote. Shares have fallen 27 percent this year, closing at $184.95 on Friday.
Boeing has been under scrutiny since a door panel exploded on a 737 Max during a commercial flight in January. Although no one was killed, some passengers were injured and the accident is reminiscent of two fatal accidents in 2018 and 2019 that the company has struggled to forget.
The U.S. Justice Department also said in court this week that Boeing violated the terms of the $2.5 billion deal it negotiated in 2021 to suspend criminal charges stemming from the crashes. The door panel accident occurred shortly before the contract expired. Boeing denies violating the agreement.
A preliminary report from the National Transportation Safety Board found that four bolts intended to secure the door panel to the fuselage were missing. The U.S. Federal Aviation Administration launched an investigation and an audit of Boeing and its supplier Spirit AeroSystems found “multiple instances” of quality defects.
Calhoun admitted in January that Boeing had made a manufacturing error. The tumult led to a shakeup at the company, with Stephanie Pope replacing Stan Deal as head of the commercial aircraft business, Steve Mollenkopf succeeding Larry Kellner as board chairman and Calhoun announcing his departure at the end of the year.
Proxy advisors Institutional Shareholder Services and Glass Lewis advised shareholders to vote against certain Boeing positions at the meeting. ISS said the board’s arguments for a Calhoun pay raise were not “particularly compelling.”
Glass Lewis advised investors to vote against Calhoun as a director, as well as two other directors who chaired the board’s security and audit committees, due to “significant concerns about board oversight administration of the company’s security culture and its attempts to overhaul it.
“The board of directors will include the involvement of shareholders voting against the company’s outgoing CEO,” the company said. “Shareholders will send a clear indication of their dissatisfaction.”
Additional reporting by Patrick Temple-West in New York
News Source : www.ft.com
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