Insight: Saturday 9 November 2019: Crocodile Tears for Muilenburg’s Bonus

News

The news media is citing Dennis Muilenburg’s statement that he asked Boeing’s board of directors to waive his bonus.  Muilenburg’s compensation in 2018 was more than $23 million in salary and bonuses, so he isn’t someone that is in financial straits.  After being ripped by congressional lawmakers for his high salary and stock options and, at that point, not willing to give up compensation, he’s had a change of heart.   Such generosity – in a year in which no bonuses should be provided at all.

Analysis

With Boeing losing billions of dollars in 2019, how could the Board even think about bonuses for senior management this year?  The concept of a Bonus for leaders who brought Boeing economic problems that will exceed $10 billion is ludicrous in the first place.  The should be no bonuses at all — zero, including no new incentive stock options or restricted share distributions for senior executives.  When the problems are eventually solved and cash flow returns to positive, that would be the time to consider the issue of bonuses and determine why the problems happened in the first place, who is responsible, and who needs to go.