Less than a week into 2024, Alaska Airlines Flight 1282 was en route from Portland, OR to Ontario, CA. When the flight was about 16,000 feet in the air, passengers heard a loud bang. A hole had formed in row 26, the result of a door-plug blowout on the Boeing 737 MAX jet. Thankfully, no one was sitting in that row, and after an emergency landing, everyone was able to deplane safely.
It was a nightmare start to the year for Boeing after a decently strong finish to 2023. The company had $77.79 billion in revenue last year, a 16.79% growth year-over-year. Boeing's stock price rose accordingly, growing about 35% throughout the year.
In 2024, it's been a different story. The stock price has already fallen below what it was at the start of 2023. Despite making $33 million last year, Boeing CEO David Calhoun is feeling the effects.
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Calhoun's total compensation in 2023 was $32.8 million. About $1.4 million of that was his base salary, with $30.2 million in equity awards and the rest in additional payouts. That compensation was more than $10 million higher than what he made in 2022 and about $12 million more than in 2020, when CEOs still earned a ton of money during the pandemic.
However, the Boeing board said Calhoun's stock had declined in value by approximately $8 million and that the company would replace him by the end of the year. Calhoun also forfeited a $2.8 million cash bonus last year and will lose about $3.75 million in stock grants this year. With the way Boeing has struggled in 2024, he could continue to see decreases in his potential earnings. In 2022, he missed out on a $7 million performance bonus as the 777X jetliner faced ongoing delays. All told, that could be essentially a $21 million pay cut over three years.
As Boeing looks for Calhoun's replacement, the company is prioritizing quality and safety rather than focusing on finances. Whoever takes over will have over half of their long-term incentive pay impacted by improving systems for pausing production due to risk assessments and by surveying employees on their understanding and execution of Boeing's safety protocols. That incentive structure will extend to other executives at the company.
While Calhoun will still make millions in his final year as Boeing CEO, it's looking like it'll be a fairly steep decline from his 2023 earnings.
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