Wednesday, February 17, 2021

Two Longtime Boeing Board Members to Step Down: Plane maker’s board has undergone changes since the 737 MAX crashes in 2018, 2019



The Wall Street Journal
By Andrew Tangel and Emily Glazer
Updated February 17, 2021 6:02 pm ET

Boeing Co.said two longtime directors would step down as the aerospace giant’s board undergoes more changes in the wake of the 737 MAX crisis.

The Chicago-based plane maker said Wednesday that Susan Schwab and Arthur Collins would retire from the board and not stand for reelection at Boeing’s annual shareholder meeting April 20. The company didn’t immediately announce the nomination of new directors for the board.

Mr. Collins, who once led medical device-maker Medtronic PLC, has been a Boeing board member since 2007. Ms. Schwab, a former U.S. trade representative, has been on the board since 2010. The Wall Street Journal reported the planned departures earlier Wednesday.

“Boeing has benefited enormously from their committed and dedicated service,” Chairman Larry Kellner said in a statement.

The departures have been under consideration in recent weeks and are part of an effort following the MAX crisis to bring people with fresh perspectives onto the board, people familiar with the matter said. Four of Boeing’s 12 directors joined the board after the accidents.

Boeing’s board has faced scrutiny from investors and U.S. lawmakers ever since two of its 737 MAX jets crashed, in October 2018 and March 2019, claiming 346 lives. A year ago, the board added two new directors with safety and engineering experience, replacing two longtime members. Since the accidents, Boeing’s board has also created a permanent safety committee and split the roles of chairman and chief executive.

The accidents led to a nearly two-year grounding of the 737 MAX before U.S. regulators approved it to resume passenger flights late last year. The MAX crisis, which Boeing has estimated will cost it about $20 billion, has since been compounded by the Covid-19 pandemic and the blow it dealt to global air travel and demand for new passenger jets.

Current and former Boeing directors and executives during the MAX crisis are facing a shareholders’ lawsuit that alleges lax board oversight as developments about the crashes unfolded. The suit, filed in Delaware’s Court of Chancery, cites internal Boeing documents and in part claims the company’s board failed to challenge then-CEO Dennis Muilenburg on the 737 MAX’s safety. It also alleges current chief David Calhoun later exaggerated to journalists the extent of the board’s oversight between the two accidents as well as after.

The company is seeking to dismiss the lawsuit, saying it lacks merit and “presents a misleading and incomplete picture” of Boeing’s actions and the board’s oversight. Boeing has said the lawsuit provides a distorted account of Mr. Calhoun’s interviews, saying the board’s extensive and active oversight was accurately explained during those media interviews.

Boeing’s board is a mix of long-serving directors and fairly recent additions. Mr. Calhoun, who became CEO early last year, has been a Boeing director since 2009. Mr. Kellner, a former airline executive, joined the board in 2011.

A year ago, Boeing added Akhil Johri, former finance chief at aerospace manufacturer United Technologies Corp. , and Steven Mollenkopf, chief executive of chip maker Qualcomm Inc. They succeeded longtime directors.

Since then, former U.S. Ambassador Caroline Kennedy, a director since 2017, has stepped down. She was succeeded by Lynne Doughtie, head of auditing firm KPMG’s U.S. operation. John Richardson, a retired Navy admiral, was named to the board in October 2019.

Two proxy advisory firms last year raised questions about board members’ oversight and recommended shareholders vote against some Boeing directors to protest their handling of the MAX crisis. Among the five board members who faced substantial opposition at last year’s annual meeting, Ms. Schwab and Mr. Collins secured backing from less than 60% of votes cast. They and the other directors overall won a majority in the shareholders’ election

Ms. Schwab has served on other corporate boards alongside fellow Boeing directors. She sits on the board of machinery maker Caterpillar Inc., where Mr. Calhoun is presiding director, according to a securities filing. Mr. Muilenburg previously served on Caterpillar’s board before his ouster as Boeing CEO in late 2019. Ms. Schwab also sits on the Marriott International Inc. board with Mr. Kellner, who is the hotel company’s lead director.

4 comments:

  1. Ms. Schwab ( Trade-Offs by Susan C Schwab) On January 13, 2009, as the Bush Administration neared its end, Schwab reportedly announced retaliatory tariffs on "dozens" of European luxury items, including 300% on Roquefort cheese...
    Reminds me of the Bombardier C series tariff. http://data.huffingtonpost.com/paypals/susan-c-schwab
    "She sits on the board of machinery maker CATERPILLAR Inc., where Mr. Calhoun is presiding director, according to a securities filing. Mr. Muilenburg previously served on CATERPILLAR’s board before his ouster as Boeing CEO in late 2019. Ms. Schwab also sits on the Marriott International Inc. board with Mr. Kellner, who is the hotel company’s lead director."
    Sounds like a fraternity clan to me. May I suggest the RICO act.

    "Caterpillar: Since 2018, the Internal Revenue Service has been demanding $2.3 billion in payments from the company in connection with the tax matters under criminal investigation. The company is contesting that finding.

    A week after Barr was nominated for the job of attorney general, Justice officials in Washington told the investigative team in the active criminal probe of Caterpillar to take “no further action” in the case, according to an email written by one of the agents and reviewed by Reuters."

    DISTRICT OF COLUMBIA v. MARRIOT (2019)

    This is a straight-forward price deception case. For at least the last decade,
    Marriott has used an unlawful trade practice called “drip pricing” in advertising its hotel rooms
    whereby Marriott initially hides a portion of a hotel room’s daily rate from consumers. Marriott
    calls this hidden portion of the room rate a number of terms, including a “resort fee,” “amenity
    fee” and a “destination fee.”
    The instant action was commenced following an investigation by the Attorneys
    General in all 50 states and the District of Columbia regarding the pricing practices of the hotel industry.

    ReplyDelete
  2. ^^You left out that Expedia, Orbitz, and Travelocity were also involved in the suit which were the actual collaborators in the hidden fees on their websites to compete with newer and smaller lowballer 3rd party travel sites. Nobody ever booked a room directly with Marriot with hidden fees (I know...I'm a 20+ year customer and Gold member). But Marriot did look the other way because they didn't want to lose out in 3rd party online booking competition that other hotel chains were also being booked with by these retailers.

    ReplyDelete
    Replies
    1. Thanks for the clarification. I did not find shared board members with the above Expedia, Orbitz, and Travelocity.
      “It’s called drip pricing,” says Robert Cole, a senior research analyst at travel research company Phocuswright. Cole calls the practice “consumer-hostile” because consumers often click on an appealing advertised nightly room price only to find that a few clicks later the real nightly room rate is much higher.

      Adding resort fees separately also allows hotels to cut commissions to travel advisors and online sites, “since the hotels only pay commissions on the lower room rate, not the additional fees,” said Albert Herrera, senior vice president of global product partnerships at the Virtuoso travel network.
      https://www.cnbc.com/2020/02/07/resort-fees-being-addressed-at-the-federal-level-helping-travelers.html

      So, in an attempt to FOK their "travel agents" out of commission $ Marriot ends up in a consumer class action in 50 states. That seems consistent with the Boeing board philosophy.

      Delete
  3. "A year ago, the board added two new directors with safety and engineering experience, replacing two longtime members." (italics mine)

    "Akhil Johri, former finance chief at aerospace manufacturer United Technologies Corp. , and Steven Mollenkopf, chief executive of chip maker Qualcomm Inc."

    How about somebody that knows something about how to design and build airplanes?

    Give me a break!

    ReplyDelete