No one needs to hold a bake sale for Boeing CEO David Calhoun even though he gave up most of his salary and bonus money last year. That’s because his stock options amount to approximately $21 million, which will vest during the next three years if he stays on the job, according to a regulatory document filed with the feds.
While handing out out these generous benefits to the boss, the multinational aircraft manufacturer lost about $12 billion last year as COVID reduced demand for new planes and as aviation travel obviously dwindled substantially. Two deadly airplane crashes that occurred in 2018 and 2019, respectively, and a related scandal also added to the company’ s woes. In that general context, while rewarding its CEO lavishly, the company laid off or bought out thousands of employees.
Despite the salary waiver, moreover, he did okay in 2020 by most standards. Calhoun, 63, a longtime board member, became CEO in January 2020. By the time he put his take-home pay on hold in March, he had already reportedly collected about $270,000 in salary plus about $290,000 in other forms of compensation.
The salary give-back reportedly reduced his annual paycheck by about $6 million, which consisted of $3.6 million in salary and a $2.5 million bonus.
As alluded to above, Calhoun is set to eventually cash in on his stock portfolio, USA Today explained. “Those grants include $7 million worth of stock for returning the Max to service after it was grounded in 2019, $10 million worth of shares to compensate for pay he left behind at his previous job at The Blackstone Group, and $3.5 million in long-term incentive awards.”
It’s not unusual for high-level executives to receive most or much of their compensation in the form of equity which is provided for by contract.
The “Max” refers to the jetliner that was involved in two crashes that resulted in the death of 346 passengers and crew.
Earlier this year, Boeing entered into an agreement with the U.S. Justice Department to pay about $2.5 billion, including a $500 million crash-victim beneficiaries fund, to resolve legal claims, including a potential criminal prosecution for allegedly misleading federal officials about the safety of the aircraft, in connection with those two crashes. Some families of the victims are separately suing Boeing, however, in civil court.
Boeing has additional legal headaches. “Pension funds in New York and Colorado are suing current and former board members and executives, including Calhoun and [former CEO Dennis] Muilenburg, in a Delaware state court. The funds accuse directors of lax safety oversight during the development of the 737 Max,” the New York Post reported.
Boeing revealed the executive pay in a proxy statement ahead of its shareholder meeting next month during which 10 directors will be elected.
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