Despite a horrendous year in which Boeing lost a record $12 billion, the company next month will pay out annual performance bonuses to most employees.
Boeing CEO Dave Calhoun told employees in a message Thursday that “during a time when many of our customers will not be in a position to offer the same incentive, our Board of Directors recognizes the important strides the team has made.”
Last year, after Boeing lost $636 million in 2019 due to the grounding of the 737 MAX, most employees received no annual bonuses.
Last February, knowing the grounding of the 737 MAX would likely mean another year of very poor financial performance, Boeing’s board changed the structure of the company’s incentive plan. Instead of basing targets largely on profits, the financial goals were tied to the timing of the first delivery of a 737 MAX after its ungrounding by the Federal Aviation Administration (FAA).
The FAA ungrounded the MAX in mid-November and Boeing duly delivered the first one in 21 months on Dec. 8. The delivery before year-end ensured there would be a bonus under the adjusted incentive plan.
Boeing Executive Vice President of Human Resources Mike D’Ambrose told employees that despite the challenging year, the “team demonstrated resilience.”
The bonuses will be distributed in cash next month and will vary according to the performance of each business unit.
The metrics in the adjusted incentive plan came out as 58% of target for the Commercial Airplanes division, 86% for the Defense and Space division, 49% for the aftermarket services division and 64% for Boeing’s corporate employees.
Employees also receive individual performance scores from their managers, which adjust the payout up or down. Each person is given a percentage of their annual gross salary, ranging from 0% up to 7%, as a target bonus, which is then multipled by the above business unit percentages.
So for example, a Commercial Airplanes employee with a high performance score of say 6%, will get a 2020 annual bonus equal to 58% of 6%, or 3.5% of gross annual salary.
For managers, the annual bonus is a much more significant proportion of their income. Boeing declines to say exactly how the management incentive scheme is structured.
For unionized employees, bonuses are determined by the plans in their contracts.
For the engineers and technical staff in the Society of Professional Engineering Employees in Aerospace union (SPEEA), their target is 5% of their gross annual pay, including overtime.
So based on the business unit performances, this means SPEEA members in the Commercial Airplanes unit will get an annual bonus equal to 58% of 5%, which translates to 2.9% of their gross salary.
SPEEA members in the Defense and Space unit will get a bonus of 86% of 5%, which is 4.3% of gross salary.
The average gross salary for SPEEA engineers in 2020 was $133,000. The average for SPEEA technical staff was $102,000.
Boeing said the Machinist union bonus payout for 2020, which is based on productivity, safety and quality metrics, has not yet been announced to employees.
Last year, when no other employees got an annual bonus, the Machinists got one equal to 2.2% of their annual pay.
Separate figures released Monday show how much Boeing shrank in 2020, both overall and in Washington state.
During the year, 15,000 Boeing jobs disappeared in Washington state as total employment here fell to 56,908. With that, Amazon leapfrogged Boeing in 2020 as the largest private employer in the state.
Overall employment companywide fell to 141,014, a drop of just over 20,000 jobs.
Boeing has said it aims to cut further to 130,000 employees by the end of this year, so there are 11,000 jobs still to go.
Washington state was hit hardest because Boeing’s Commercial Airplanes unit here has suffered the biggest hit from both the MAX grounding and the huge reduction in air travel due to the pandemic.
Just shy of 3,000 highly paid employees represented by SPEEA left Boeing in the past year, bringing the union’s membership down to 14,170.