Boeing Chief Executive Dennis Muilenburg testifies before the House Transportation and Infrastructure Committee during a hearing on the grounded 737 MAX in the wake of deadly crashes, on Capitol Hill in Washington, October 30, 2019.
Sarah Silbiger | Reuters
Boeing‘s embattled CEO Dennis Muilenburg suggested he forgo all bonuses this year as the company grapples with the fallout of two crashes of the 737 Max, the company’s new chairman told CNBC Tuesday.
The decision comes under harsh criticism from lawmakers in hearings on Capitol Hill last week over the CEO’s compensation last year that topped $20 million, despite a crash of a 737 Max in Indonesia in October 2018. Another 737 Max crashed in Ethiopia in March. Together the crashes killed all 346 people on the flights.
Boeing chairman David Calhoun said Muilenburg called him Saturday morning “with the purpose of suggesting that he not take any compensation for 2019 in the form of bonuses, which of course is most of your compensation.”
“It came in two fronts: one, no short- no long-term bonus and three, no consideration for equity grants until the Max in its entirety is back in the air and flying safely,” Calhoun said, adding that it could take until 2021 before the Max is back in the air “in its entirety.”
Lawmakers railed against Muilenburg last week over his compensation and refusal to step down over the crisis. The two days of hearings were tough for Muilenburg, Calhoun said. The night after the first hearing, Muilenburg listened to the victims’ families.
“He listened for several hours to every story, every story the victims’ families presented to him. Changed him for life,” Calhoun said.
Boeing’s board stripped Muilenburg of his chairmanship on Oct. 11 saying it had “full confidence” in him as CEO and that the move would help him better address the 737 Max issues. Regulators grounded the planes worldwide after the second crash in March, forcing Boeing to halt deliveries and slash production of its best-selling aircraft.
Boeing has been scrambling to get software fixes for the planes approved by regulators but so far they haven’t signed off. The manufacturer plans to continue using the 737 Max brand name, Calhoun said.
Some of Boeing’s 737 Max customers, including Southwest and American, have complained about hundreds of millions of dollars in lost revenue because of the Max grounding. Calhoun reiterated that the manufacturer plans to have settlements with its customers and said its balance sheet can handle that.
Boeing took a nearly $5 billion-charge in the second quarter to compensate airlines.