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Boeing board blocks shareholder push to bring HQ back to Seattle

By Dominic Gates, The Seattle Times
Published: February 26, 2024, 7:39am

SEATTLE — Boeing’s board has killed a longshot shareholder proposal that the company move its headquarters back to Seattle.

The proposal was put forward to be voted on this spring at Boeing’s annual general meeting by 83-year-old Walter Ryan, a retired Chicago business owner, corporate gadfly and stock market investor who owns 10,000 shares in the company.

But a Securities and Exchange Commission ruling last week means shareholders won’t get to vote on his proposal. With SEC approval, Boeing’s board won’t put it on the ballot.

Ryan bought the shares in December 2019, right after the first 737 MAX crash in Indonesia, when the stock was priced at just under $337. He assumed Boeing would quickly recover, “the stock would go up, and they’d correct all their problems,” he said in an interview. “I was wrong.”

Boeing stock today is hovering around $200, his investment down more than 40%.

“It’s a shame that they took a company that was a first-class operation and drove it into the ground,” Ryan said.

Seeking the starting point for that downward arc, Ryan fixed upon the physical relocation in 2001 of Boeing’s world headquarters from Seattle, where the jets are designed and built, to Chicago. Boeing in 2022 then moved the headquarters again, this time to northern Virginia.

Ryan proposed to begin to reverse the decline by bringing the top leadership back to Seattle.

But, in response to a request for clarification from Boeing corporate secretary John Demers, the SEC ruled Wednesday that the board is entitled to omit Ryan’s proposal from the shareholder ballot.

Essentially, the SEC agreed with Boeing that forcing it to relocate the headquarters would be improper interference with management’s prerogatives.

Activist, gadfly investor

Ryan, who now lives in Las Vegas and plans to move soon to Arizona, has never been to Seattle.

He built a successful chain of family convenience stores in Chicago in the 1960s and ‘70s, starting with selling dairy products, then packaged ice, and then gasoline.

“We had the highest volume gasoline and dairy in the city of Chicago back in the late ‘60s,” Ryan said.

He sold the businesses in the early 1980s, for between $3 million and $5 million — “no more than that,” as he recalls — then went back to school “to get an education” and became a stock market investor.

Through the market growth over the ensuing decades, he grew that small fortune and now has investments in multiple companies worth many tens of millions of dollars.

“It’s not like I am such a genius,” Ryan said. “I just searched for stocks that were undervalued and I bought them and hung on to them.”

He is very much an activist investor. If a company isn’t performing, Ryan tries to rattle management’s cage. Until now, he’s used lawsuits to do that.

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He has sued multiple companies over the years, alleging management malpractice. He has two shareholder class-action lawsuits still pending, one against Wells Fargo and another against a company called Analog Devices.

But he says he’s not litigating for money.

“That’s not the idea. The idea is to have them clean their act up so that they do better and the stock goes up and their dividends go up,” Ryan said. “That’s how I make my money. Not from lawsuits.”

He admits to being aggressive.

“I’ll attack somebody when I think that they’re doing the wrong thing,” Ryan said. “And Boeing just happened to really get in my craw, to be honest.”

He wants Boeing’s leadership to focus on the company’s historic legacy of making quality airplanes so the public can “be comfortable in flying their planes” and the share price will then rise accordingly — to his benefit.

SEC backs Boeing

This time, he chose a shareholder proposal as his vehicle to get management’s attention.

In a statement supporting his proposal, Ryan wrote that “Boeing became an industry leader in commercial aviation because of the close working relationship between manufacturing, engineering, and management.”

He added that “the most significant factor” in the company’s decline “was relocating Boeing’s headquarters from Seattle and separating executives from Boeing’s core commercial manufacturing business.”

He wrote that returning the headquarters to Seattle “will send a meaningful signal Boeing credibly intends to resume its position at the top of the commercial airplane business, restore its reputation for safety and excellence, and is committed to fixing its problems.”

But in a detailed rebuttal letter to the SEC, Boeing lawyer Demers cited previous rulings that shareholders cannot be allowed to “micro-manage” a company or to take away management’s flexibility in making decisions.

“Certain tasks are so fundamental to management’s ability to run a company

on a day-to-day basis that they could not, as a practical matter, be subject to direct shareholder oversight,” Demers quoted from one prior SEC ruling.

Citing another precedent, he said some strategic decisions, including relocation, are “matters of a complex nature upon which shareholders, as a group, would not be in a position to make an informed judgment.”

The SEC agreed and approved the omission of the proposal from the general meeting vote. The date for that is not yet set, though it is typically held in late April.

Ryan said he had hoped to get Boeing “cleaned up” and the stock stabilized with a view to buying more shares.

“I’m interested in seeing the best for Boeing because, like I say, I either want to possibly buy more or I want to get out and say I made 10 bucks,” Ryan said. “But it didn’t work.”