Boeing taps internal executive with three decades’ experience for top job, but it might not be a ‘slam dunk,’ CEO succession expert says

Boeing it was announced this morning that CEO Dave Calhoun will leave the company and that the thirty-year executive at the $117 billion company, Stephanie Pope, would lead. As Pope oversees the troubled business, investors are waiting in the wings to see what Pope wants to do in the next 12 months — and how Boeing will sue him.

Pope has a bumpy road with management, investors and customers in rebuilding the company’s culture and proving to the world that people can trust. Boeing has been struggling since Calhoun replaced Dennis Muilenburg in 2019 after 346 people died flying Boeing-made planes. The US Department of Justice later paid Boeing $2.5 billion to settle federal fraud charges against the Federal Aviation Association in January 2021. Three years later, Calhoun is stepping down amid widespread customer and public outrage after parts of Boeing-made airplanes began to blow mid-air; last week Boeing board membersincluding Kellner, began holding meetings with major clients without Calhoun present.

“They’ve had a few years to figure out what’s going on with the engineering-conference job and they haven’t realized what it is,” said Jason Schloetzer, an assistant professor at Georgetown University who has studied CEO succession and success. “They want to clean house to the next level and get a new team in there with new eyes and new motivation to make it happen – because you can’t disrupt change if you can’t assess the situation and identify what needs to be fixed, let alone implement a plan to fix it.”

A Boeing insider is probably cheaper than an outsider

Going with Pope as an internal chief executive is much cheaper than hiring someone from outside Boeing, said Maria Vu, director of North American compensation research at consulting firm Glass Lewis. The company’s expatriate CEO would have demanded that Boeing pay all the “excessive” money, to cover what would be left behind by the employer. In addition, distressed companies often have to offer more incentives to attract executives from other companies to take over the distressed business. It is unclear at this time whether Boeing will pay Pope more than the compensation he received as chief operating officer, which was $1.2 million in salary plus a $2 million annual bonus and $10 million in long-term incentives. Once Boeing discloses Pope’s intentions, investors can watch closely to see if the company wants to hold Pope accountable for changing Boeing’s culture, he said.

“It seems that there is a big risk to the business if the culture of the company is not affected,” said Vu. “It will be a sign that the organization wants to change the culture if you look at the things that Mrs. Pope is promoting in her motivational activities.”

With Pope, the company is turning to a former CEO to turn the company around and on the one hand, “it’s good,” Schloetzer said. He is “a person who knows the business well and has been there for a long time and knows what is going on,” he said. On the other hand, the Pope is also “a person who has been there when these things have happened.”

“It’s not easy to find someone who can come and think through an organization like Boeing, so it makes sense to have an insider, but it’s not a dirty thing,” Schloetzer said. According to Schloetzer, there may also be hiring below the C-suite and NEO level to bring new ideas to Boeing.

Along with Calhoun-Pope’s endorsement, top blood drivers include Stan Deal, president and CEO of Boeing’s commercial aircraft group, and board chairman Larry Kellner, who joined the board in 2019 when Calhoun stepped down as a board member. to the CEO. The company has also seen the exit of other key positions in the past few years, including Leanne Caret, president and CEO of Boeing’s safety, space and security unit, and senior vice president and treasurer David Dohnalek. Boeing appointed Steve Mollenkopf to replace Kellner.

In January, Boeing announced this Calhoun recruited Admiral Kirkland Donald as a special consultant to investigate Boeing’s corporate governance. Kirkland, who is the chairman of the $11.5 billion defense company Huntington Ingalls, was supposed to give Calhoun and Boeing’s aviation safety committee a report and recommendations. The review is ongoing, a Boeing spokeswoman said in a statement Chance.

For Calhoun, the bulk of his $20 million salary was supposed to come from his long-term incentive award, which was targeted at $17 million. By the end of 2023, they should see the 737 MAX back in service; changes in the engineer’s work; 777x on introduction of jet-engine-engine into service and delivery and design of a replacement system. The prize has not been awarded, according to the company’s disclosure.

“In many cases, in order to encourage businesses to act quickly and to change things, especially if there is a risk to the business, we can expect to renew incentive programs to solve this,” said Vu.

As for Calhoun, he has at least $20 million in cash coming in and possibly $45.5 million, depending on Pope’s performance as CEO. However, the Boeing board may offer him compensation as part of his departure or the board may refuse to do so to avoid a review.

“The way they categorize their departures is the conversation they need to have in the conversation,” Vu said.

Subscribe to CHRO Daily, our newsletter focused on helping HR executives navigate workplace change. Log in for free.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *