Boeing fired CEO Dennis Muilenburg Monday morning, amid the continued fallout over two crashes of its best-selling plane, the 737 Max, that killed 346 people last year.
Boeing CFO Greg Smith will serve as interim CEO until Jan. 13, when David Calhoun, the company’s current board chair will take over the chief executive job. Boeing stock is up approximately 2 percent Monday in the wake of the news.
“Dave has deep industry experience and a proven track record of strong leadership, and he recognizes the challenges we must confront,” Lawrence Kellner, non-executive chairman of the board, said in a statement. “The Board and I look forward to working with him and the rest of the Boeing team to ensure that today marks a new way forward for our company.”
Boeing said today that “a change in leadership was necessary to restore confidence in the Company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders.”
The 737 Max planes have been grounded since March, several months after the two catastrophic crashes in Indonesia and Ethiopia killed hundreds of passengers and raised deep questions about the planes’ safety. Since that time, regulators have launched multiple investigations into the development and certification of the planes.
Last month Boeing announced it would suspend production of 737 Max jets starting in January and move the people working on them to other teams.
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Investigators traced the root cause of the crashes to an automatic control system that pushed the planes into deep, unrecoverable dives due to faulty sensor data. Boeing says it has developed a software patch that should resolve the problem, but the Federal Aviation Administration has not yet signed off on the fix.
Over the weekend, Boeing had to cut short a test flight of its CST-100 Starliner space taxi due to a glitch with the craft’s timing system. Because of the glitch, NASA and Boeing had to forgo Starliner’s planned trip to the International Space Station. But the uncrewed transport still notched a first in space history nevertheless by becoming the first crew-capable U.S. space capsule to make its return from orbit on land.
Muilenburg is a Boeing lifer, who has been with the company since 1985, starting as an intern. He became CEO in 2015. In April, Muilenburg rebuffed the idea of resigning over the 737 Max issues.
Boeing’s 2019 proxy statement to shareholders reports that Muilenburg’s total compensation last year amounted to $30 million — including a $1.7 million salary, $5.4 million in annual incentives, $7.6 million in long-term incentive payouts and $15.3 million in stock award vesting.
That’s more than twice the median compensation for CEOs at the biggest U.S. companies, based on a Wall Street Journal/MyLogIQ survey. But it pales in comparison with the $129.4 million paid to the top CEO on the list for 2018, Discovery Inc.’s David Zaslav.
Boeing’s statement says Muilenburg could be paid as much as $39 million upon termination of employment. The actual figure is highly dependent on performance payments and the company’s share price.
Muilenburg’s cash severance is listed at $6.6 million, and the total estimate of $39 million is based on Boeing’s share price at the end of 2018. The price is actually higher now than it was then, but the performance payout might be lower than previously estimated — so we’ll have to wait for a future financial statement to see how it all gets sorted out.
Update for 4:53 p.m. PT Dec. 23: We’ve added details about Muilenburg’s compensation.