© Reuters. FILE PHOTO: Dave Calhoun, CEO of Boeing, speaks on stage during the delivery of the final 747 jet at their plant in Everett, Washington, U.S. January 31, 2023. REUTERS/David Ryder/File Photo
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By Valerie Insinna
WASHINGTON (Reuters) – Boeing (NYSE:) Co. Chief Executive Dave Calhoun will not receive a $7 million bonus due to the company’s failure to enter the 777X into service by the end of 2023, Boeing said Friday.
Boeing offered the performance-based incentive to Calhoun when he replaced former CEO Dennis Muilenburg in January 2020 and required that Calhoun achieve seven milestones by the end of this year.
Boeing’s compensation committee determined in August 2022 that the award would not vest when it became clear that Calhoun would not meet the 777X entry into service goal by 2023, according to a company filing posted on Friday afternoon ahead of an April 18 shareholder meeting.
Calhoun took home $7 million in pay last year, slightly less than his $7.4 million compensation in 2021, Boeing stated in the filing. His total compensation, which includes longterm incentives that have not yet vested, measured $22.5 million in 2022, an increase from about $21 million the previous year.
In 2022, Boeing confirmed that first delivery of the widebody 777X had slipped to 2025, most recently because of a setback in the aircraft certification timeline. The aircraft, also known as the 777-9, is a larger version of the original 777 aircraft and has been in development since 2013.
Boeing’s board of directors said Calhoun “substantially achieved, or is on track to substantially achieve” most of the award’s performance goals, which include the return to service of the 737 MAX in 2020. The board also praised Calhoun’s leadership in the filing, saying the CEO made several decisions on the 777X program that were in the company’s long term interests but came at the expense of the goal being met.
In February, Boeing awarded Calhoun an incentive worth approximately $5.3 million – made in restricted stock units that vest in 2024 and 2025 – in order to induce the CEO to stay through the company’s projected recovery period.
While the company pointed to the 777X program as the reason Calhoun will not receive his bonus, other milestones associated with the incentive have yet to be successfully completed, such as the first crewed Starliner launch currently projected for April. The terms of the award also called for Calhoun to meet certain milestones on the Boeing-Embraer joint venture, which dissolved in 2020.
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