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Boeing investors should vote against chief executive David Calhoun’s $32.8mn pay package, shareholder adviser ISS has said, in the latest blow to the aircraft maker after a mid-air door plug blow out in January on one of its planes.
In a report released late on Friday night, Institutional Shareholder Services said Calhoun’s 45 per cent year-on-year pay increase should be rejected by investors at Boeing’s May 17 annual meeting.
Calhoun’s pay jumped even though he did not get an annual cash bonus for 2023. However, Boeing’s board “significantly increased” his long-term bonuses for the third straight year, ISS said.
The board’s rationale was not “particularly compelling for such a significant increase, especially given two other recent increases since Calhoun became CEO in 2020”, said ISS, which is the largest shareholder advisory firm.
Calhoun, 66, said in March he would step down at the end of the year and a succession process was under way.
The board also gave Calhoun a large share grant that pays out over a relatively short period, ISS said. While this grant was meant to match shares Calhoun purchased in late 2022, “many investors may question this additional time-based grant, in combination with the significant increase in his long-term incentive award opportunity”, ISS said.
Calhoun was also paid $514,285 for private jet flights, ISS noted, a total that “significantly exceeded” median pay for flights among chief executives of S&P 500-listed companies.
Boeing did not immediately respond to a request for comment on Saturday. The company’s share price closed at $179,79 on Friday, down 29 per cent since the beginning of the year.
In January, an Alaska Airlines Boeing 737 Max aircraft made an emergency landing after a door plug blew out during the flight. Boeing has been in upheaval since then. The Federal Aviation Administration has temporarily grounded some 737 Max aircraft.
Last month Boeing said it had burnt through almost $4bn of cash in the first quarter. It also paid $443mn in compensation to aircraft customers after the Alaska Airlines blowout.
Despite the recommendation against his pay, ISS recommended that shareholders should support Calhoun for re-election to the Boeing board, as well as the other directors who are facing a vote, including aerospace safety committee chair David Joyce.
“Boeing unquestionably has much work still to do to regain the confidence of airlines, passengers and regulators,” ISS said. However, “support, with caution, is considered warranted for Joyce”.