Thousands of workers jobs cut as former boss walks away with $62M

https://www.theguardian.com/business/2020/feb/01/boeing-workers-spirit-layoffs-future-unsure

by soapboxrocket • 6 years ago

65 27 6 years ago

egdod• 6 years ago

That’s nothing. Look at the numbers for WeWork and Adam Neumann.

jonex• 6 years ago

The previous chief executive was "contractually entitled to receive $62.2m in stock and pension awards" that was accrued over 35 years at the company, but "he did not receive any severance pay or a 2019 annual bonus".

How this is relevant in connection to the loss of jobs due to production interruptions is not at all clear. My impressions is that it's only made as clickbait in the hope that the reader would believe that he got it as severance or bonus payment.

Pfhreak2• 6 years ago

About 2 million a year is a whole lot more than those laid off workers earned while there.

Freestyler_3• 6 years ago

Exactly, this was the deal that was made when he got the job.

One thing that can be done is make a person personally responsible as executive, but everything has a downside.

dragonwriter• 6 years ago

Exactly, this was the deal that was made when he got the job.

Yes, that's how the overlapping capitalist and executive classes take care of themselves, no matter what outcomes they produce, while assuring that labor pays a heavy price whenever something for which capital/executives are responsible goes wrong.

That's rather the point.

toomuchtodo2• 6 years ago

Why would it be wrong to clawback for lack of performance for the years that led up to Boeing’s reckoning? It’s not like it all happened in 2019. Contracts can be changed as business conditions change, or you’re found to be contributing to an environment where you’re flying the business towards the ground.

CEO was overpaid for failing (so much so Boeing had to fish for a $10B credit line), take back some of the comp and distribute it as additional severance to workers impacted by said executive failure.

soapboxrocket4• 6 years ago

I agree with you here, he was responsible for the company that built the failed culture and airplane.

soapboxrocket4• 6 years ago

The title is a bit click baity, but the point here is that Boeing isn't the one paying for the current shut down. The way the industry operates is that suppliers, like Spirit, don't get paid until 90 days after the airplane is delivered. No deliveries in over a year yet until recently they were still expected to deliver parts. Boeing is also taking payments on the airplanes every time they paint them, 1/3 on order, 1/3 on paint, and 1/3 on delivery.

It's the optics that are bad. Boeing CEO creates a culture where the 737MAX was designed and delivered, and failed.

soapboxrocket4• 6 years ago

Just add to what I wrote above. Perhaps you are right that he should get the money, it was in his contract. But as a society and company builders let's learn from the error and force better contracts onto the CEOs. It's time that the CEOs stopped writing their own contracts.

hogFeast• 6 years ago

I think the issue is that there is no notion of downside risk. No claw back. A high responsibility position with, apparently, no responsibility.

This kind of thing, as an investor, is utterly maddening (ex-investor, I am glad I don't have to meet these people anymore). Pay for performance is no issue, the issue is that there is no performance. If you want the big job, you take the big risks...this is capitalism without failure (what is most maddening is that these people often see themselves as arch-capitalists...they are not, they are socialists milking the principal-agent problem to death).

Most CEOs are vastly overpaid. For scale, I would guess that the number of truly effective CEOs since WW2 is under 100 (I have only came across a handful). Today's CEOs are not type-A, successful geniuses...the majority will fail (the return on the average listed stock is negative), they will fail for basic/preventable reasons. As a public investor, your hope is that you just have a CEO who is dumb/ineffective...the ones who are smart are usually devious too and will do real damage.

I have no idea where we go from here but it is important to recognise that this isn't capitalism and this isn't sustainable. Public company boards are a big problem (again, nothing at risk) but there is also a deep incompetence...sometimes this is just not understanding what a company is there for (i.e. can be fixed by training), sometimes this is more about failures of personality/morality (i.e. we are actively picking bad people).

But yeah, this is a big issue: workers hate it, shareholders hate it, and nothing we have done so far has solved this (unsurprisingly, all the executive pay and linking to company performance is utter shit...I see this backfire more than it works i.e. a no-nothing director who was CEO somewhere else and ran the company into the ground sets targets which are either the wrong variable, too hard, or too easy...it never works). The risk from overpaying for a CEO is far larger than the risk from underpaying one (in fact, overpaying suggests that you have no idea what these people are actually worth and don't know what you are doing). It is totally reasonable to look at someone getting paid $60m (regardless of the circumstance) for failure, and going..."this doesn't make sense". If you get paid this much, you take the big risk. There has to be responsibility.

TaylorAlexander• 6 years ago

The question is whether these contracts make sense. Why are the people who fabricate the aircraft treated as expendable while the executives get a golden parachute? Why was this contract considered sound in the first place while some workers can get fired with immediate closure of their health care?

It makes one wonder if the workers should unionize. I do understand multiple companies (Boeing and several suppliers) are mentioned here, so maybe some of them have some kind of union. But the story is a microcosm of our times. A CEO who seems complicit in an episode that killed many and lost the company $13B gets paid enough to relax in luxury forever while the regular people who had nothing to do with the problem or actively fought against it suffer.

To me, the fact that the CEOs contract was agreed upon in advance does not suddenly make this situation fine. Perhaps we need to reformulate massive companies like this as worker owned cooperatives. Certainly in my mind we need to end the huge unequal privilege that executives have, however that should work out.

aetherson2• 6 years ago

I don't think you know what "golden parachute" means.

bobbob1921• 6 years ago

bc we live in a free labor market , and that is what it takes to attract talent at the c level (+ supply/demand).

not sure why this same scrutiny does not apply to pro athletes or actors/recording artists.

foogazi• 6 years ago

it made sense to the exCEO and Boeing, the two parties that made that agreement

fzeroracer• 6 years ago

People are angry because the position of CEO is billed as the one with the most responsibility and yet they take on none of it.

They can drive a company into the ground and still walk away all the richer. Any time the company does something well the CEO gets all the credit while all the bad things are shrugged off.

Responsibility means consequences both good and bad.

tjbiddle• 6 years ago

So, digging into this a bit further. He started 35 years ago as an intern - so the contract period that would have given him this incentive is much, much shorter.

Muilenburg started as CEO in 2015 and ended in 2019. So that's a 4-year pay gap - seems like a lot now, right? It does - but then I look and see that the performance of Boeing was up 150%, earning $100,000,000,000 ($100 Billion) since he took over - which is $70 Billion over the average S&P gain would've been.

So, let's round-up $62.2m to $70m and use the $70B figure - He earned a 0.1% return of the stock value gain. (Almost half that if taking the other figures).

No idea what the actual contract was - but that seems entirely reasonable to me. Not to mention it was awarded in stock, so the value stays in the company anyhow; especially when I'm sure there's some sort of wait period or other limits on selling the shares.

soapboxrocket4• 6 years ago

I have two big issues here:

1) in your math you are assuming he took no money off the table in the 4 years before this point; that is just plain not true, he go bonuses every other year before 2019

2) I believe that profits/growth on a whole ate a trailing indicator, so his actual impact will be seen over the next couple of years; and if you look at 2019 as the first time in 22 years that the company posted a loss...

Pfhreak2• 6 years ago

This is what capitalism looks like. This is happening all over, and shouldn't come as any particular surprise to anyone.

We've been on this neoliberal track for the past 40-50 years and it's consistently been to the benefit of the bosses at the top and none of the workers below.

I'd love to see more coops, more unions, heck, even nationalizing some companies (like Boeing in particular) and putting different objectives in place than purely capital gain.

Unions aren't a silver bullet. Some unions are bad. Coops aren't a silver bullet, and some coops are bad. But we're clearly much too far in the neoliberal capitalist sphere now.

lotsofpulp• 6 years ago

“I’m going through the struggle of finding a job, which is hard enough here in Wichita without 2,800 others also looking.”

This is why people put up with the high cost of living cities.

InTheArena2• 6 years ago

Spirit Aerosystems has been a consistent problem for Boeing. Quality problems there are so great that people are flying planes from Kansas to Washington to get their safety and quality check out. Boeing, the union, and the workers all have turned a blind eye to quality and safety, and that’s why people - the CEO and the workers - are entitled to what they have in a contact. That does not cover future employment. the ultimate outcome here was easily predictable by anyone watching Boeing on the last 10 years, and by no means is the problem only at the top.

Boeing is heading towards a government bail out very rapidly.

mroche• 6 years ago

Boeing is heading towards a government bail out very rapidly.

If this situation comes into reality and the government or another institution does not bail Boeing out, what kind of impact would we expect to see on the aerospace industry and community?

InTheArena2• 6 years ago

It’s happened in the past - most notably when Rolls Royce screwed up the engine for the Lockheed L-1011, taking both companies down. Both were bailed out by their respective governments( RR was government owned, Lockheed received loans with government backing) but Lockheed left the commercial sector despite easily having the best plane in the market.

superbrane• 6 years ago

CEO was rewarded for increasing artificially the stock price, through stock buy backs. He did a good job at that and a bad job at managing an industrial company. That s how big companies start to fail, they lose sight of what matters.

purplezooey• 6 years ago

"I’m going through the struggle of finding a job, which is hard enough here in Wichita without 2,800 others also looking.”

This is like being a software engineer and living somewhere outside the BA.

Thousands of workers jobs cut as former boss walks away with $62M

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