In an apparent effort to save face in the fallout from the ongoing 737 Max crisis, Boeing has announced that it will not be giving Dennis Muilenburg, its ousted CEO, any severance pay. However, the move has backfired by drawing attention to the astronomical amount of compensation he is still receiving from stock awards, pensions, and other benefits.
Muilenburg will receive a staggering $62 million in total compensation despite not receiving a severance package. The situation calls into question the excesses of executive compensation in the United States.
Boeing is still reeling from the crisis that started with a series of fatal crashes of its best-selling 737 Max aircraft. The company is trying desperately to stem the fallout and salvage its reputation. But things are going from bad to worse with many believing the problems at Boeing originate at the highest levels.
Dennis Muilenburg is widely believed to have mishandled the 737 crisis , and his departure without severance looks like a way for the company to try to save face and show sympathy for the victims of its faulty aircraft. However, Muilenburg’s hefty compensation makes this ploy fall flat. Even without a severance package, the former CEO stands to make a substantial amount through stock options, a pension, and other forms of compensation.
Several U.S lawmakers are even using Muilenburg’s massive payout for political expediency. U.S Senator Elizabeth Warren posted the following on Twitter:
Dennis Muilenburg’s golden parachute is, perhaps, a cruel irony to the families who lost loved ones due to his company’s negligence. And to make matters worse, Boeing hasn’t changed anything about the way it pays executives.
David L. Calhoun, Muilenburg’s replacement in the CEO position at Boeing , will receive an annual base salary of $1.4 million. This comes in addition to an annual incentive award of 180% of base salary and a long-term incentive award of 500% of base salary. He will also get a $7 million long-term incentive award and $10 million worth of restricted stock units with a three-year vesting period.
The good news is that Boeing has added an “enhanced clawback clause” that allows it to limit Calhoun’s compensation in the case of misconduct. Hopefully, the company won’t have to use it.