Should Boeing's CEO Get a 45% Pay Raise for a 45% Failure? Inside His Controversial $32.8 Million Pay Package. Boeing CEO David Calhoun's leadership has resulted in financial struggles and dissatisfied workers — and a proposed $32.8 million pay package as he walks out the door.
By Christopher Salvi Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Boeing CEO David Calhoun's tenure is marred by serious quality control failures, poor leadership, and poor performance. His announced departure at the end of 2024 can't come soon enough in the opinion of many. Amid these crises, the proposed $32.8 million pay package for Calhoun is not only unwarranted but an affront to all stakeholders demanding accountability and change.
Under Calhoun's leadership, Boeing has faced a string of safety issues and lawsuits, including a mid-air door plug blowout on an Alaska Airlines flight that led to the temporary grounding of the 737 Max jets and a Federal Aviation Administration investigation. These incidents highlight a broken safety culture that has sparked outrage from consumers, investors, and lawmakers alike.
Related: Crisis Management Lessons From Boeing's Mid-Flight Blowout
Institutional Shareholder Services (ISS) and Glass Lewis & Co. are right to urge Boeing investors to vote against Calhoun's excessive pay package. During Calhoun's tenure to date, Boeing's stock has plummeted by 45%+ (May 13, 2024 price), yet he stands to receive a 45% pay increase.
Rewarding failure in leadership sends the wrong message and undermines efforts to hold the company accountable for its shortcomings. Glass Lewis's call to reject the reelection of Calhoun and two other directors responsible for overseeing the company's safety practices underscores the dire need for a leadership overhaul.
Employees, who have endured the fallout from these quality control issues and the resulting operational disruptions, would justifiably be pissed by Calhoun's proposed pay increase. While the workforce faces uncertainty and stress, seeing their leader receive a massive raise amidst the turmoil only exacerbates their frustration and diminishes morale. It shows a disconnect between the executive leadership and the everyday realities faced by Boeing's employees.
Related: Boeing Found to Have Violated $2.5 Billion Settlement Agreement
Rewarding Calhoun with a substantial pay increase suggests that Boeing is indifferent to the severe operational and safety lapses under his watch. Instead of rewarding failure, Boeing's board should focus on leadership that prioritizes transparency, accountability, safety, and excellence.
My Take
Boeing's leadership can benefit from adopting a proactive and honest communication strategy. Regular updates, direct engagement with employees, investors, and the public, and a clear plan to address and rectify safety issues are key. This approach is not just about managing perceptions; it's about rebuilding trust from the inside out. If the CEO fails and gets paid, the same goes for the employees, no?
Seriously, how do you address a workforce with information like this? It's not true leadership and the employees can tell. Communicate not only with words but with the actions of voting against the pay raise. As Calhoun steps down, Boeing has an opportunity to reset its leadership and restore its reputation. Investors are encouraged to reject the current pay package proposal and instead invest in leadership that calls for a commitment to excellence. Excellence gets rewarded, not failure.
It's okay to fail Mr. Calhoun but to get rich off poor performance, would you do the same for your employees?
