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Tuesday, September 26, 2023
Sept. 26, 2023

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Boeing Washington workers split $513M in bonuses as CEO’s pay tops $22M


Boeing paid out $513 million in annual bonuses to 64,000 employees in Washington, much of that in paychecks this week, a substantial boost for the economies in King and Snohomish counties.

Companywide, Boeing paid out $1.2 billion pretax in annual bonuses to just over 143,000 employees.

Members of the Machinists union, who were paid their bonuses last month, saw them severely cut compared to last year. White-collar employees, paid Thursday and including members of the engineering union, fared better.

However, those in Boeing’s Defense division got considerably lower bonuses than those in the other business units.

Separately, on Friday an annual regulatory filing disclosed the compensation given to Boeing’s top executives in 2022, a year in which Boeing lost $5.1 billion, the fourth straight year of losses.

The filing shows Boeing’s board of directors was forced to kill a $7 million grant awarded to CEO Dave Calhoun when he took the job in 2020 conditional on achieving certain performance goals. Key targets were missed.

Nevertheless, Calhoun did all right. He received $22.5 million in total compensation last year, 154 times the $145,000 salary of the median Boeing employee.

In Friday’s filing, despite the necessity of that $7 million cut, the board expressed continued confidence in Calhoun’s leadership.

Last month, it granted him shares — not contingent on company performance and worth $15 million at today’s price — that will vest in installments over the next three years.

Stan Deal, CEO of the local Commercial Airplanes division received total compensation of $8.8 million last year.

Annual bonuses

We won’t know the size of Calhoun’s or Deal’s annual bonuses paid out this month until this time next year. Friday’s filing shows their 2022 bonuses were $3.4 million and $1.7 million, respectively.

For other employees, the company disclosed the total amounts, and unions provided the average bonuses received by their members.

For all white-collar staff, these annual bonuses are based on a combination of financial and operational performance metrics for the previous year.

The main financial measure considered in the annual bonus calculation — free cash flow — was $2.3 billion in 2022, the first positive annual cash flow result since 2018.

In addition, operational performance is considered based on five metrics: product safety; employee safety; quality; reduction in energy use; and equity, diversity and inclusion.

The employee safety and quality targets were not achieved in 2022, though the other three targets were met.

Financial performance varied by business unit. As a result, employees in the Defense and Space division, which performed poorly last year, will get 71% of their target bonus.

In contrast, Commercial Airplanes employees will get 116%; those in the Services unit 148%; and corporate employees 111%.

For about 15,600 members of the Society of Professional Engineering Employees in Aerospace, the bonus for meeting target was set at 5% of their 2022 salary. Depending on which business unit they are in, they will get either 71%, 116%, 148% or 111% of that amount.

The result is that SPEEA engineers got an average pretax bonus this week just shy of $7,700 while SPEEA technical staff got $5,900 on average.

The bonuses of the 26,000 members of the International Association of Machinists union at Boeing are calculated purely on safety, productivity and quality metrics.

Last month, they were awarded an annual bonus equal to just 3.6% of their total 2022 pay, well down from the 5.8% bonus awarded last year and far below the maximum 6% payout allowed in the union contract.

That will provide an average bonus of about $2,700 to Machinists.

IAM spokesperson Deirdre Kaniewski said the disappointing bonus was because the Machinists “are required to make improvements over the previous years’ progress.”

“Our members are measured more stringently than all other groups, and they deserve to be recognized for their success on the factory floor,” Kaniewski said via email. “We will continue to look for ways to recognize our value.”

The average bonus paid out in Washington was more than $8,000 pretax, a figure elevated by higher payouts to managers and executives.

For them, the cash part of their bonuses is based on similar scoring to that of other employees — though with a much higher percentage of salary set as the bonus for meeting target.

Boeing leadership 2022 compensation

Calhoun’s total compensation in 2022 of $22.5 million includes grants of shares that will vest in the future. His actual take-home pay last year, consisting of base salary, annual bonus and previously awarded shares that vested in 2022, was $7 million.

The much lower figure for take-home pay is because the largest part of the long-term incentive plan for executives awarded three years earlier was contingent on company financial performance. Because of the losses, for the third year in a row that paid out zero to all executives.

The company board in the filing made clear it had no choice but to kill the $7 million grant awarded to Calhoun in 2020. That award was contingent on a set of targets that had to be “substantially achieved” by the end of this year.

Those included:

* Getting the 737 MAX back in service — Check.

* Completing a crewed Starliner spaceflight — Not yet.

* Getting the 777X into passenger service — 2025 at the earliest.

The board wrote it was “compelled by the clear terms” set in 2020 to rule that Calhoun will not get the $7 million.

However, the board blamed that outcome on the effect of the pandemic more than Calhoun, and emphasized its faith in his leadership.

“The board recognizes and greatly appreciates Mr. Calhoun’s leadership and many actions over the last three years to navigate through a constantly changing environment,” the filing states.

Accordingly, last month the board granted Calhoun a special retention bonus of 25,000 shares, worth $5.4 million at today’s share price, to stay for two more years — half of that vesting in early 2024 and half in early 2025.

That was in addition to a long-term incentive award the same day of more than 44,600 shares, worth $9.6 million at today’s price, that will pay out in early 2026.

The 2022 compensation of the five most highly paid executives below Calhoun was also laid out in Friday’s filing.

Commercial Airplanes chief Deal’s $8.8 million total compensation package made him the second highest-paid executive. Deal’s actual take-home pay in 2022 was $3.3 million.

Total 2022 compensation for the other named executives was:

* Chief Financial Officer Brian West: $8.6 million

* Former Defense and Space CEO Leann Caret: $6.6 million

* New Defense and Space CEO Ted Colbert: $6.2 million

* Chief Legal Officer Brett Gerry: $6.2 million

On Friday though, one frontline Boeing worker blasted all those figures away.

Becky Bell, a 36-year Boeing employee who works in Auburn in supply procurement, claimed a $755 million state lottery prize.

Making the announcement Friday, a state lottery official said Bell bought the winning ticket when she saw the jackpot hit $747 million just days after Boeing delivered its final 747 jumbo jet.

Bell elected to take the $404 million Powerball jackpot cash option, and after taxes, took home about $310 million.