Boeing’s outsize financial performance last year sent the stock soaring, and correspondingly the pay of its top executives, the company revealed in a securities filing Friday — even as the company faces a crisis after two deadly airplane crashes.
In 2018, Boeing Chairman and Chief Executive Dennis Muilenburg was awarded total compensation including stock awards of $23.4 million, up from $18.5 million a year earlier.
The filing notes that this is 184 times the median compensation of a Boeing employee in 2018, which was $126,991.
A supplemental note in the Securities and Exchange Commission filing reveals that when exercises of stock options granted in previous years are included, Muilenburg actually pocketed $30 million, up from $24 million a year ago.
This stellar compensation reflects Boeing’s financials. Executives are assessed on their execution of business strategy as well as the company’s performance on cash flow, profit and revenue.
Last year the company generated a record $15.3 billion in cash, made a record profit of $10.5 billion, and took in record revenue of $101 billion.
Since he took over as CEO in July 2015, Muilenburg has seemed to have a golden touch.
Despite setbacks like delays to the KC-46 tanker program, Boeing has been flying high versus its rival Airbus. In particular, Boeing’s 737 MAX — the model involved in the two recent crashes — has been a best-seller, with more than 5,000 ordered.
The company has enjoyed such solid profits and cash flow that from Muilenburg’s appointment until just before the Ethiopian Airlines crash last Sunday, the stock price has tripled.
But now, for the first time, Muilenburg faces a crisis.
In the five days since the Ethiopian crash, Boeing’s stock has plummeted 11 percent, driven by the fear that some fault in the design of the 737 MAX may have caused both that crash and that of a Lion Air jet in October.
With the MAX aircraft grounded worldwide, Boeing’s cash flow will be severely crimped without deliveries of this cash-cow airplane. Boeing also faces the prospect of having to pay compensation both to airline customers and the families of victims.
The stock-price plunge directly affects the net worth of Boeing’s executives.
Muilenburg’s net worth has dropped $6 million in five days. An SEC filing this month showed he currently owns 143,190 Boeing shares, including some not yet vested. Before the crash those were worth $60.5 million. At today’s price, that’s dropped to $54.3 million.
A filing at the end of last month shows Kevin McAllister, the head of Boeing Commercial Airplanes, owns 125,595 Boeing shares, also including some not yet vested. A week ago, those were worth $53 million. Today they’re worth $47.6 million.
The SEC filing also lists the compensation of the four most highly paid Boeing executives last year besides Muilenburg.
Because Greg Smith, Boeing’s chief financial officer, had expanded his role considerably in 2017 — he took the added title of executive vice president of enterprise performance and strategy, and so was granted a one-time award of shares worth $10 million — his pay went down last year relative to that bonanza.
In 2018, Smith’s total compensation was $8.7 million, down from $17.2 million in 2017.
Surprisingly, McAllister, though head of the commercial-jet division that pulled in two thirds of total company profits, did not make the top five of the most highly paid executives — and so his pay is not disclosed in the SEC filing.
Likewise, Stan Deal, head of the new Global Services unit, Boeing’s second most profitable division, is outside the top five.
Instead, the top five earners in 2018 included Leanne Caret, head of Boeing Defense, Space & Security, who was awarded $10.7 million; Greg Hyslop, chief technology officer, who was awarded $8.6 million; and the company’s top lawyer Michael Luttig, who was awarded $7.8 million.