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Boeing investors registered their displeasure with chief executive Dave Calhoun on Friday, lodging sizeable protest votes against his pay package and board re-election, though they fell short of blocking either.
Though largely symbolic, the votes at the company’s annual meeting marked one of the biggest revolts this year against a CEO of a company in the Dow Jones Industrial Average. Pushback at this scale on a corporate vote is a sign of significant frustration from shareholders.
More than a third of investors withheld approval in an advisory vote on executive remuneration. Calhoun is expected to receive $32.8mn this year — a 45 per cent raise — but 35 per cent of shareholders objected. And 22 per cent voted against keeping him as a director of the aircraft manufacturer as it struggles to address safety and quality lapses.
Calhoun previously announced plans to step down as CEO at the end of the year. Boeing did not immediately comment on the results of the vote. The shares have declined 27 per cent this year, closing at $184.95 on Friday.
Boeing has been under scrutiny since a door panel blew off a 737 Max during a commercial flight in January. Though no one was killed, some passengers were injured, and the accident recalled twin fatal crashes in 2018 and 2019 that the company has struggled to put behind it.
The US Department of Justice also said in court this week that Boeing had breached the terms of the $2.5bn deal it negotiated in 2021 to defer criminal prosecution stemming from the crashes. The door panel accident occurred shortly before the agreement expired. Boeing disputes that it violated the agreement.
A preliminary report from the National Transportation Safety Board found four bolts meant to fasten the door panel to the fuselage were missing. The US Federal Aviation Administration launched an investigation and an audit of Boeing and supplier Spirit AeroSystems found “multiple instances” of quality lapses.
Calhoun admitted in January that Boeing made a manufacturing error. The uproar has led to a shake-up at the company, with Stephanie Pope replacing Stan Deal as the head of the commercial aeroplane business, Steve Mollenkopf succeeding Larry Kellner as board chair and Calhoun saying he will leave at the end of the year.
Proxy advisers Institutional Shareholder Services and Glass Lewis counselled shareholders to vote against some of Boeing’s positions at the meeting. ISS said the board’s case for raising Calhoun’s pay was not “particularly compelling”.
Glass Lewis advised investors to vote against Calhoun as a director, as well as two other directors who chaired the board’s safety and audit committees, because of “significant concerns regarding the board’s oversight of the company’s safety culture and its attempts to overhaul it”.
“The board will understand the implication of shareholders voting against the company’s outgoing CEO,” the firm said. “Shareholders will be sending a clear indication of discontent.”
Additional reporting by Patrick Temple-West in New York
