The launch of Boeing’s 787 Dreamliner has been delayed so often that it would be comical except that the aerospace firm’s shareholders and customers are not laughing. Boeing trades at $50, down from more than $100 less than two years ago. Management has been appropriately blamed for most of the tardiness which has been caused by labor unrest, supply chain problems, and design flaws. Each time the delivery date was pushed back again, investors wondered why management was getting a vote of confidence from the board.
The vote of confidence period came to a head as Boeing said that the chief of the firm’s commercial airline business would leave his job a week from now. That is sudden, much more sudden than would be expected for a man who has been with the company for four decades. Scott Carson will be replaced by the head of Boeing’s other large division—defense. The person who will keep his current job although he should not is the firm’s CEO Jim McNerney, who has managed to produce shameful results without hisboard doing anything about it—other than dictating Carson’s departure.
McNerney will keep his job as Boeing CEO. He made $18.7 million last year, slightly less than the year before. Over the three year period when the 787 has been in real trouble this CEO has made $58 million, which is not what the Boeing shareholders deserve.
The anger over executive compensation has recently focused on Goldman Sachs (GS). A number of people there will make tens of millions of dollars this year. Their defense for being given that money is that Goldman is having a record year in terms of profits. Goldman’s shares have significantly outperformed the DJIA over the last year. Boeing’s shares have underperformed.
Goldman has a case, and a strong one, for its management being paid well. Boeing does not have a reason to keep its CEO. The company said goodbye to the wrong man. Boeing’s statements about the change barely disguised the fact that the company had one man fall on his sword and the CEO kept his job, received an enormous pay package and the Boeing plane is still grounded.
Executive Producer: Philip MacDonald