Boeing Ex-CEO Muilenburg To Get No Bonus Or Severance

There are now two definitions of “lead parachute” – one, of course, is a Boeing 737 MAX, the other is the farewell payment former Boeing CEO Dennis Muilenberg will receive for his 35 year contribution to the company. Or rather won’t.

Late on Friday, Boeing issued a terse, brief and to-the-point statement in which it announced that as a result of the recent catastrophic collapse in Boeing’s reputation following the countless scandals that have emerged in the aftermath of the 737 MAX grounding in which it emerged that the company was eager to repeatedly cut any and all corners and gamble with people’s lives just to get a quick, cheap version of the 737 workhorse plane in the air former CEO Dennis Muilenburg would get not severance or annual bonus:

Boeing Statement on Compensation for Dennis Muilenburg

We thank Dennis for his nearly 35 years of service to The Boeing Company. Upon his departure, Dennis received the benefits to which he was contractually entitled and he did not receive any severance pay or a 2019 annual bonus.s

At the same time, the company also issued an 8K laying out the compensation arrangement of “certain officers”, in which it got this close to disclosing whether Muilenburg was fired or quit on his own…. and then whiffed, courtesy of the passive voice, to wit: “as previously disclosed, Dennis A. Muilenburg ceased to serve as President and Chief Executive Officer of the Company.” One thing is certain: he wanted to spend more time with his family, if only to tell them never to fly on a 737 MAX.

Boeing also provided a full breakdown of what Muilenburg would receive (as per his contractual obligations):

In addition, as previously disclosed, Dennis A. Muilenburg ceased to serve as President and Chief Executive Officer of the Company, and resigned as a member of the Board, on December 22, 2019. Mr. Muilenburg is not entitled to-and did not receive-any severance or separation payments in connection with his retirement after more than 30 years with the Company. In addition, the Board has confirmed that Mr. Muilenburg will receive no payment under the Company’s annual incentive plan for 2019. Mr. Muilenburg also forfeited 11,266 RSUs, 10,398 performance-based restricted stock units (“PBRSUs”), and 72,746 performance awards in connection with his retirement. Mr. Muilenburg is entitled to contractual, pre-existing retirement benefits. As a result, he vested in pro-rated portions of previously granted long-term incentive awards based on the number of months he was employed during the applicable vesting or performance period. These consist of:

• 25,034 RSUs;
• 23,384 PBRSUs, which will be paid only to the extent earned based on the Company’s total shareholder return relative to peer companies; and
• 130,780 performance awards, which will be paid only to the extent earned based on Company operating performance.

Based on the closing stock price on January 9, 2020, and assuming performance at target for the PBRSUs and performance awards, the forfeited awards would have been valued at approximately $14.6 million, while the vested long-term incentive awards would be valued at approximately $29.4 million. Additional terms of the long-term incentive awards are disclosed in the 2019 Proxy Statement. Mr. Muilenburg also vested in certain stock unit awards earned prior to his service as President and Chief Executive Officer that, based on the closing stock price on January 9, 2020, are valued at approximately $4.3 million. In addition, Mr. Muilenburg will receive distributions of pension and nonqualified deferred compensation benefits earned during his tenure with the Company that, including contributions made by Mr. Muilenburg, were valued at approximately $28.5 million as of December 31, 2019. As disclosed in the 2019 Proxy Statement, Mr. Muilenburg also holds options to purchase 72,969 shares of Company common stock. These options have an exercise price of $75.97 and vested in full in 2013, prior to his service as President and Chief Executive Officer.

Finally, Boeing also disclosed that as part of the company’s new CEO compensation, David Calhoun would be eligible to receive “additional long-term incentive award valued at approximately $7 million which will be earned only upon continued employment and the achievement of several key business milestones, including full safe return to service of the 737 MAX.”

And before you say “so never”, remember that all it will take is for another generation of Boeing monkeys to cut corners, and get the clowns to send the death-machine back into the air.