All 10 company nominees to the Board of Directors were elected or reelected. They were unopposed, so there was no room for a showdown on this score.
Dissident shareholder resolutions were voted down. Company resolutions were approved.
The only surprise came an hour before the meeting, when Boeing announced that Greg Smith, the CFO since 2011, will retire July 9. This wasn’t expected.
In the same announcement, the Board waived the mandatory retirement age of 65 for CEO David Calhoun. He turned 64 Sunday. The Board gave Calhoun until age 70 before he’d have to retire. There’s nothing to say he couldn’t before then. But this gives Calhoun more time to right the ship and set Boeing on a new path for the future. Calhoun’s one year Countdown now has up to six years.
Below are some initial reactions from Wall Street aerospace analysts about the two moves.
While Calhoun does not have a fixed term contract, the decision extends his mandatory retirement out to April 1,2028. We did not find the extension surprising, given the challenges Boeing has been working through since Calhoun became CEO at the beginning of 2020, related to both the pandemic and product issues in both commercial and defense businesses.
Second, Boeing announced that Greg Smith, EVP, Enterprise Operations and CFO, would retire from the company effective July 9 this year. The company said it is conducting a search for Smith’s successor but did not provide further details. Smith was appointed CFO in 2011, with this role later expanded to EVP of Finance, Enterprise Performance and Strategy, and more recently EVP of Enterprise Operations, Finance and Sustainability. He also served as the interim CEO immediately prior to Calhoun’s appointment to the role. We do not yet know the Board’s approach to this search –primarily if it will be both internal and external.
Our guess is that the retirement of CFO Greg Smith announced today may be related to the extension of CEO Dave Calhoun’s mandatory retirement by five years to 2028, blocking Smith’s potential to get the top slot. Because Mr. Smith is highly regarded, investors will be sensitive to the timing & choice of a new CFO.
Retirement of CFOs tend to be viewed with skepticism by investors who fear potential for “bad news.” However, we surmise that Greg Smith’s decision to leave was his own and doesn’t signal any likely “negative surprises.” Greg Smith has been in the CFO slot for 10 years and was promoted to head of enterprise operations, finance, and strategy a year ago.
He is well regarded and considered a strong leader. Hence, he likely is hopeful of becoming a CEO. Because Mr. Smith was respected as a strong CFO, investors will be sensitive to the timing and perception of his replacement. We assume that potential candidates for the role will include Akhil Johri, respected long time CFO at United Technologies, who left after the RTX merger and recently joined BA’s board.
Dave Calhoun intends to shepherd Boeing’s recovery. With up to six years to go as CEO, Calhoun seems intent on seeing through Boeing’s recovery from both COVID-19 and the 737 MAX crisis. This means he will likely preside over Boeing’s next product development decisions. Boeing’s need for a stronger competitor to the A321neo is oft-discussed, and press reports have talked of options the company may be exploring, including both single- and twin-aisle projects; however, the need to ramp MAX production, shore up the company’s financial condition, and gauge the air travel world that will emerge from COVID-19 are near-term issues that could push out any decision.
Further personnel changes possible. With the additional title of EVP, Enterprise Operations, Greg Smith is an operational CFO with a central role at the company who also presided over the Enterprise Process Councils meant to streamline and strengthen Boeing. We could therefore see more organizational changes around his departure on July 9.