Boeing made fixes to flight-control software to get the 737 Max back in the air.
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Boeing made a couple of big management announcements Tuesday: CEO Dave Calhoun can stay until he’s 70, five years longer than Boeing’s mandatory retirement age, and CFO Greg Smith is retiring at 54.
The news seems to unnerve investors, who don’t like to be caught off guard. Calhoun staying might not be a big surprise, but Smith leaving is.
Shares of Boeing (ticker: BA) were down about 4.2%, to $233.53, in midday trading. The S&P 500 and Dow Jones Industrial Average were both off roughly 0.9%.
Investors could have predicted the 64-year-old Calhoun would stay past 65. He just arrived at Boeing in 2019 after the board made the decision to replace then-CEO Dennis Muilenburg during the 737 MAX crisis.
The MAX was grounded worldwide from March 2019 to December 2020 after two deadly crashes in five months. Boeing spent many more months working on fixes to flight-control software while MAX inventory piled up.
Staying makes sense for Calhoun, running Boeing is lucrative. He took home $21 million in total compensation in 2020 based on Boeing’s proxy filing. Muilenburg made about $23 million in 2018, the year before the MAX woes hit the commercial aerospace giant.
Smith made a little more than $5 million in 2020. Boeing will now look for his successor.
Vertical Research Partners analyst Rob Stallard called Smith’s departure a surprise in a Tuesday report.
“Given how much praise CEO Calhoun had heaped on CFO Greg Smith over the last year, the news that he is retiring may appear odd,” wrote the analyst. “For Calhoun, Smith’s decision to step down presents an opportunity and a risk—while a Boeing outsider as CFO could bring a new perspective, this is a company that has tended to promote internally in the past.”
Added risk isn’t something Boeing investors want. Covid-19 decimated demand for commercial air travel. Pandemic was another hit to Boeing shares, above and beyond MAX problems.
Now management transition is a new, albeit smaller, issue for investors to watch.
Write to Al Root at [email protected]
