Boeing's Ex-CEO Walked Away With About $80.7 Million

Former Boeing Chief Executive Officer Dennis Muilenburg won’t get severance and must forfeit stock awards worth tens of millions of dollars after his botched handling of two deadly plane crashes ended a decades-long career at the company.

He forfeited unvested equity awards that could have been worth as much as $31 million if certain targets had been exceeded, Chicago-based Boeing said Friday in a regulatory filing. Muilenburg, 56, also won’t receive a bonus for 2019.

Still, he gets to keep awards and stock options that had already vested, along with his pension and deferred pay—totaling as much as $80.7 million, according to calculations by Bloomberg. By contrast, Boeing set aside $50 million to compensate the families of crash victims.

The loss of some awards and denial of severance sends a strong signal that the board lost confidence in the once-heralded CEO.

It was a swift fall for Muilenburg, whose 34-year career unraveled last year in the aftermath of the accidents involving the firm’s 737 Max jetliner, which killed 346 people. The crashes prompted a global flight ban of the aircraft, damaged the planemaker’s reputation, and lopped more than $50 billion off its market value.

“Dennis received the benefits to which he was contractually entitled,” Boeing said in an emailed statement. “We thank Dennis for his nearly 35 years of service.”

Lost confidence

Muilenburg tried for months to help the firm regain its footing. But directors lost confidence after he struggled to defend Boeing before U.S. lawmakers, failed to repair its relationship with the Federal Aviation Administration, and repeatedly underestimated the time needed to get the grounded airplanes back in operation.

In December, the company was publicly rebuked by FAA head Steve Dickson and also said it would temporarily halt production of the planes. Then came the embarrassing failure to dock its Starliner space capsule with the International Space Station. Days later, the board voted to dismiss Muilenburg.

David Calhoun, a General Electric veteran who has been on Boeing’s board for a decade, was named CEO effective Jan. 13. The board granted him $10.9 million in annual target compensation, and two other awards worth a combined $17 million, one of them tied to operational milestones that include a “full safe return to service of the 737 Max,” according to the filing.

Public-company executives typically don’t receive severance benefits if they’re fired because they violated the firm’s policy or broke laws. Terminations and resignations prompted by poor job performance or loss of confidence among directors, however, can fall in a gray area.

In such instances, boards sometimes strike bespoke deals with departing executives, allowing them to collect some or all of their severance and keep some of their previously granted stock awards—arrangements that can amount to tens of millions of dollars. In exchange, the executive typically must promise not to sue or publicly criticize the company.

But boards can also elect to withhold exit payments—a move that some may interpret as a public rebuke.

Previous awards

Muilenburg didn’t have a fixed-term employment agreement with Boeing, but he was entitled to receive a year’s salary and bonus and immediate vesting of his outstanding stock awards if he was laid off.

But he hardly left empty-handed. Boeing allowed him to keep some portions of previously granted awards, stock options and money he’s accumulated in his pension and deferred compensation account, which functions as super-sized 401(k).

The awards were worth about $33.7 million as of Friday’s close, assuming the company tops certain performance thresholds. His options would net him $18.5 million if he exercised them and immediately sold the shares. And his pension and deferred pay amounted to $28.5 million as of Dec. 31.

In all, it adds up to about $80.7 million.

Boeing also disclosed that Kevin McAllister, who led the firm’s commercial airplanes division until he was fired on Oct. 22, had to give up awards and dividends worth approximately $52.9 million. But he did receive $14.8 million to make him whole for a pension benefit he forfeited when he left GE.