Boeing’s board of directors has awarded CEO Dave Calhoun with an incentive of approximately $5.29 million to keep him at the helm of the company throughout its recovery from the COVID-19 pandemic and the 737 MAX crises. The incentive is in the form of 25,000 restricted stock units, which will vest in two installments on the first and second anniversary of the grant.
Retention Grant for Calhoun
Boeing’s board of directors has expressed confidence in Calhoun’s leadership and the company’s direction by awarding him this retention grant. The board may not look for a new CEO until at least the mid-2020s when the company is expected to return to pre-pandemic production rates. Calhoun had been the company’s chairman before he took over as CEO in January 2020, following the firing of Dennis Muilenburg. He had a total compensation of $21.1 million in both 2020 and 2021, and in 2021, the board approved a long-term incentive award target of $16 million.
Free Cash Flow Target
Calhoun has made it his priority to boost free cash flow to help the company recover from supply chain disruptions caused by the pandemic and increase production of its 737 MAX and 787 jetliners. Boeing hopes to increase its cash flow from $2.3 billion in 2022 to between $3 billion and $5 billion in 2023. The incentive awarded to Calhoun comes just weeks after Boeing reported positive cash flow for the first time since 2018.
Extended Retirement Age
In April 2021, Boeing extended its required retirement age of 65 to 70 to enable Calhoun to stay in the top job. Calhoun will turn 66 in April, and the retention grant is a clear indication of the board’s intention to keep him as the CEO for the foreseeable future.
Despite the incentive awarded to Calhoun, Boeing’s shares were down 55 cents to close at $211.66 on Friday before the announcement. However, the shares have risen by almost 70% since early October.
The retention grant awarded to Calhoun is a clear indication of the board’s confidence in his leadership and the company’s future. It also highlights the importance of free cash flow to help Boeing recover from supply chain disruptions and increase production of its 737 MAX and 787 jetliners. The incentive will help ensure that Calhoun stays with the company through its recovery from the pandemic and the 737 MAX crises.