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Boeing: Ex-CEO Muilenburg Didn't Receive Any Severance

Boeing: Ex-CEO Muilenburg Didn't Receive Any Severance
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Friday, 10 January 2020 05:50 PM

Former Boeing Co. 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 (BA) said Friday in a regulatory filing. Muilenburg, 56, also won’t receive a bonus for 2019.

The loss of awards and absence of severance compensation sends a strong signal about the board’s loss of confidence in the once-heralded CEO. It marks a swift fall for Muilenburg, whose 34-year career unraveled last year in the aftermath of two 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.

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 Co. veteran who has been on Boeing’s board for a decade, was named CEO effective Jan. 13.

Poor Performance

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 not make exit payments -- a move that some may interpret as a public rebuke.

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

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Former Boeing Co. 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.
boeing, ceo, severance, former, ex, muilenburg
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2020-50-10
Friday, 10 January 2020 05:50 PM
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