Boeing strips CEO of chairman job over 737 Max crisis

Bloomberg

Boeing Co stripped Chief Executive Officer Dennis Muilenburg of his role as chairman, leaving him little margin for error in his final push to resolve the crisis engulfing the company’s 737 Max jetliner.
Separating the CEO and chairman roles will let Muilenburg focus on getting the grounded jet back in the air, Boeing said in a statement. While the board expressed its continued support for Muilenburg, it pledged “active oversight” of his performance, a sign of the pressure he’s under to surmount regulatory hurdles and soothe the safety concerns of customers, pilots and passengers.
Lead director David Calhoun, a senior executive at Blackstone Group Inc, will take over as non-executive chairman. Calhoun, 62, a former boss of General Electric Co’s aviation division, stands out on the board for his deep aerospace experience and has been mentioned in years past as a contender for Boeing’s CEO job.
“It provides stability and continuity but also introduces a new approach to leadership,” said Richard Aboulafia, an aerospace analyst at Teal Group. “It’s not a huge move in itself, but it creates the potential for a much bigger move.”
Muilenburg, 55, is under increasing scrutiny as the global flying ban on the Max nears the seven-month mark, with little clarity on when Boeing’s best-selling jet will return to service. The planemaker’s reputation and finances have been battered since two Max crashes killed 346 people and prompted a worldwide grounding.
The shares were little changed after the close of regular trading in New York, having advanced 1.1% to $374.92 in the session. Boeing slumped after the flying ban began in March, but the stock has climbed 17% since mid-August as investors bet that the Max would soon return to service.
That’s the biggest gain on the Dow Jones Industrial Average over that period.
The board will soon add a director who will serve on a new safety panel, Calhoun said in the statement. The Aerospace Safety Committee is part of a board-ordered safety push.
“The board has full confidence in Dennis as CEO,” he said.
Muilenburg, 55, said he was “fully supportive” of the change.
“Our entire team is laser-focussed on returning the 737 Max safely to service and delivering on the full breadth of our company’s commitments,” he said in the statement. He took the reins as CEO in July 2015 and added the chairmanship in March 2016.

Governance Activists
Corporate-governance activists had already been clamoring to separate the chairman and CEO positions.
Boeing opposed a proposal to divide the roles at the annual meeting earlier this year, saying directors should be able to select their leadership structure rather than be bound by an “inflexible policy.” Investors rejected the measure but it won 27% support, up from 20% the year before, including abstentions and non-votes.
Shareholder activist John Chevedden filed a proposal to raise the matter again at Boeing’s 2020 annual meeting.
Directors would have the discretion to phase in an independent chairman, “although it would be better to have an immediate transition,” the measure said.
The Max’s return continues to slip amid scrutiny from sometimes fractious regulators.
Until recent weeks, Boeing had insisted the plane would be cleared early in the fourth quarter.
A longer delay would jeopardise Muilenburg’s position as CEO, said Aboulafia.
“If they’re on course for re-certification in the fourth quarter as they maintain, then he could hang on,” he said.