By Scott Hamilton
Dec. 23, 2019, © Leeham News: The Boeing Board of Directors has fired Dennis Muilenburg.
Board chairman David Calhoun was named president and CEO, effective next month. The delay is required while Calhoun resigns from other business commitments.
Boeing CFO Greg Smith was named interim CEO. Board member Lawrence Kellner was named non-executive chairman.
Calhoun has been on the board 10 years. The roots of Boeing’s current crisis includes decisions made by the Board. Is Calhoun, an insider, the right person to pull Boeing out of its dive?
Muilenburg was demoted in October from his position as chairman, remaining president and CEO.
Despite a rousing endorsement last month by David Calhoun, a long-time Boeing board member who was named chairman after the demotion, that from the board’s perspective, Muilenburg had done everything right, few supported this position.
The 737 MAX crisis only got worse under Muilenburg’s leadership.
Despite many forecasts about an early return to service, the grounding of the MAX extended time and again, like an airline’s creeping delay of a flight at the airport.
Muilenburg mishandled family relations from the two MAX crashes.
His public relations responses were awful (though I blame the corporate lawyers for setting this tone).
His Congressional hearing performance was terrible.
Relations with the Federal Aviation Administration spiraled down like an MCAS-induced flaw.
Relations with airlines and lessors are tanking (also in part due to Boeing’s legal position on compensation).
Calhoun was the Board’s lead director for years.
He’s been on the Board since 2009. He’s been part of the Board policy-making that led to the cost-cutting some say had deleterious impact on the development of the MAX.
He’s been part of the Board decisions that shareholder value is the No. 1 priority at Boeing.
His career includes GE, and the GE influence permeated the Board of Directors for years with his and other directors who had GE background. This influence contributed to the direction the Board set about shareholder value, cost-cutting and operating margins.
As noted in my Oct. 7 column, the Boeing board is entrenched.
It also fails to include a pilot of high stature—someone like a Chesley Sullenburger or the late Al Haynes. Given what’s happened, a former investigator from the National Transportation Safety Board or a former member of the EASA regulatory agency might be a good addition.
The GE cost-cutting culture in the executive ranks and the Board that’s been prevalent for 20 years needs to go.
Crucial is a Board that has fresh perspective and is not married to “shareholder value” as the No. 1, 2 and 3 priorities.
Shareholder value is important, of course. But not at the expense of safety and investing in new airplanes rather than derivatives of a 50-year old design (the 737) or a band aid (the 777X).
Whether Calhoun, who has been part of the problem, is the person to make these changes remains to be seen.