Boeing is sticking with Chief Executive Officer Dave Calhoun to guide the company through a long and uncertain recovery, while parting ways with a potential contender for his job.
The company’s board raised Calhoun’s retirement age to 70, citing the 64-year-old’s “substantial progress” in ending the 737 MAX grounding and bringing the planemaker back from the COVID-19 pandemic. In another surprise, Boeing said Tuesday that Chief Financial Officer Greg Smith will exit July 9 after guiding the company’s operations through years of turmoil.
The shake-up tightens Calhoun’s grip and eliminates potential distractions over succession as he carries out a multiyear rebuilding effort. The departing CFO had been overseeing the company’s day-to-day turnaround efforts and was a familiar face on Wall Street. Last year, Smith spearheaded a $25 billion bond financing — the biggest in Boeing’s history — to keep the company afloat amid the unprecedented travel collapse caused by the pandemic.
The decision “gives an outline of the leadership path for Boeing in the 2020s, though there is still much to learn about strategy and personnel,” Seth Seifman, an analyst with JPMorgan Chase & Co., said in a note to clients.
Boeing fell 4.1% to $234.06 at the close in New York, the biggest decline on the Dow Jones Industrial Average. That shaved almost $6 billion off the company’s market value amid a rout in airlines and other travel-related stocks stoked by rising concern over the industry’s recovery prospects.
Speaking at Boeing’s annual meeting Tuesday, the CEO vowed to return the planemaker to its engineering roots. He also outlined initiatives to shake up the company’s culture and streamline its business as it restructures after burning through $20 billion in cash last year.
“We want future generations of Boeing’s stakeholders to conclude that at this moment in our history, we listened, we adapted, we stayed focused, we remained tireless in our pursuit of continuous improvement,” Calhoun said.
The board’s action was precipitated by Calhoun’s 64th birthday on Sunday, one year before the company’s mandatory retirement age, said a person familiar with the matter. Directors wanted to dispel any uncertainty around the company’s long-term leadership plans ahead of its annual meeting, the person said.
Chairman Larry Kellner praised Calhoun’s efforts to guide the company through “one of the most challenging and complex periods in its long history,” saying in a statement that it was in the company’s best interest to waive its retirement requirement. Boeing has done so for other CEOs, most recently Jim McNerney, who stepped down in 2015.
The decision to keep Calhoun on board for longer means he will probably preside over Boeing’s next new airplane program as it seeks to counter Airbus’s hot-selling A321 jet, Seifman said.
Calhoun, a former General Electric vice chairman, had served on Boeing’s board for a decade before taking the top job last year after Dennis Muilenburg was ousted for botching the company’s response to the 737 MAX disasters. Calhoun indicated Tuesday that Boeing’s era of shoveling cash to shareholders is long gone.
When Boeing returns to generating cash, its first priority will be investing in its business and repaying debt, he said. Dividends will have to wait until air travel and the company’s finances recover. Asked about Boeing’s plans for its next all-new airplane, the CEO stressed ongoing work to refine engineering modeling, materials and manufacturing, saying they would be the “real differentiators.”
In three decades at Boeing, Smith rose from the factory floor to the executive suite in the company’s Chicago headquarters, where he managed its finances and led its strategy for much of the past decade.
Smith, 54, more recently took on greater management responsibility, starting manufacturing councils and overseeing Boeing’s post-pandemic restructuring. He also served as interim CEO after the late-2019 executive shake-up.
“After a decade running the Boeing finance department, Smith has had a good run — and the last two years have been particularly challenging,” Robert Stallard, an analyst with Vertical Research Partners, said in a report to clients.
“For Calhoun, Smith’s decision to step down presents an opportunity and a risk,” Stallard said. “While a Boeing outsider as CFO could bring a new perspective, this is a company that has tended to promote internally.”
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