Dennis Muilenburg will walk away from Boeing with a potential $80m in stock, pension benefits and share options after being fired as chief executive in the midst of the worst crisis in the manufacturer’s 103-year history.
The former engineer, who spent nearly 35 years with Boeing before his abrupt exit last month, forfeited almost $15m in promised incentives and is getting no severance pay or annual bonus, Boeing said on Friday.
However, it added in a statement from the board and a filing with the Securities and Exchange Commission that Mr Muilenburg received the benefits to which his contract entitled him.
These include $29.4m in vested awards granted in his five years as chief executive, another $4.3m in similar awards predating his appointment to the top job and $28.5m in “pension and deferred compensation benefits” amounting to an exit package of $62.2m.
On top of that, he retains fully vested options to buy 72,969 shares at an exercise price of $75.97. At Friday’s closing price of $329.92, these were worth $18.5m.
Boeing put the news out late on Friday at the end of a tumultuous week for the $185bn company, which has been in crisis mode since the grounding of the 737 Max last March after the second of two fatal crashes.
On Tuesday, it reversed its previous position and said pilots should have simulator training before flying the Max when it is cleared for a return to service.
Hours after that, a Boeing aircraft fell from the skies of Tehran after a suspected missile attack. On Thursday the company handed authorities 117 pages of internal messages revealing widespread concern about its culture and products among employees.
Then on Friday a major supplier announced 2,800 job cuts and its chief regulator, the Federal Aviation Administration, said it might fine Boeing $5.4m for installing parts that had failed safety testing on 178 Max jets.
Boeing, which paid Mr Muilenburg $23.4m in 2018, also said on Friday that its board had approved a compensation package for his successor, David Calhoun, who starts in the job next week.
Mr Calhoun, a former General Electric and Nielsen executive who spent a decade on Boeing’s board before being named chief executive, will earn a $1.4m base salary, below Mr Muilenburg’s last disclosed salary of $1.7m.
His bonuses will also be calculated differently. Mr Muilenburg was entitled to an annual bonus of up to 175 per cent of his base pay and long-term incentives worth up to 750 per cent of salary. Mr Calhoun could earn a 180 per cent annual bonus and 500 per cent of his salary under one long-term incentive plan, plus another roughly $7m if Boeing hits certain milestones including a “full safe return to service” of the Max.
Restricted stock units worth $10m will vest over three years to compensate Mr Calhoun for amounts he is forfeiting by leaving the private equity firm Blackstone.
“His compensation package established by the board reflects the proven track record and deep expertise he brings to the role,” the Boeing board said in a statement, “as well as the compensation he is forfeiting as he departs Blackstone to join Boeing . . . The board is confident Dave is the right leader to strengthen Boeing’s safety culture, improve transparency and rebuild trust.”
The company’s SEC filing also disclosed that Kevin McAllister, former head of its commercial planes business, forfeited $52.9m in equity awards and earned dividend equivalents when he was fired on October 22. He received a $14.8m lump sum cash payment, roughly equal to a pension benefit he forfeited when he left another employer.