Boeing’s managers companywide are getting a much fatter 2014 bonus than the engineers or Machinists.
Boeing next month will give its three tiers of nonexecutive managers annual bonuses equal to approximately 12.5 percent, 17.5 percent and 22.5 percent of their salaries, far exceeding the bonuses recently granted to rank-and-file employees.
The payouts on March 6, based on last year’s performance, will go to about 13,000 managers companywide, with about half of those in Washington state, Boeing said.
This month, Boeing’s Machinists got an annual bonus of 3.1 percent of gross pay, and engineers and other nonmanagement salaried staff learned they’ll get a bonus equivalent to about 4.8 percent of base salary.
Third-level managers: 22.5% of salary
Second-level managers: 17.5%
First-level managers: 12.5%
Engineers, other nonmanagement salaried staff: 4.8%
Machinists: 3.1% of gross pay
One Boeing engineer, who asked not to be identified for fear of company retaliation, said his peers are trying to “come to terms with how generous that payout is going to be for the management team” compared to the much smaller percentage payout to nonmanagers.
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The larger bonuses are at least in part designed to compensate for the fact that in 2014 Boeing changed the pay structure so that managers no longer get paid for overtime.
One first-line engineering manager, who asked not to be identified, said that he and his peers, who sign engineering releases, push through certification processes and are responsible for keeping the workplace humming, work lots of mandatory overtime.
The loss of overtime pay meant that last year he earned tens of thousands of dollars less than some non-managerial engineers in his group, he said.
In an interview, Alan May, vice president of human resources at Boeing Commercial Airplanes, said Boeing pays all employees “at or above market” compared to total compensation at similar companies.
“We make sure we benchmark each one of our jobs … with the way the market pays that particular role,” May said.
He said it’s typical in the corporate world that “the higher you go in management, the higher the percentage target a manager would receive.”
For the engineers and nonmanagement salaried staff, the incentive plan uses a scoring system based on last year’s financial results to determine the payout.
The management-incentive plan, new at Boeing this year, uses the same scoring system with an added adjustment for individual performance.
May noted that this individual component of the management plan, unlike the engineering bonus plan, means an underperforming individual manager could potentially earn much less than the average.
But the average size of the bonuses from the two plans differs dramatically because the baseline target payouts are very different.
If the company financials meet preset targets, the engineers and salaried staff get 10 days’ extra pay, which is equivalent to 3.8 percent of base salary.
This year, they were granted 12.5 days’ extra pay, above target but well short of the maximum 20 days.
In contrast, the new management-incentive plan is set up so that if the company financials meet the preset targets, first-level managers get a bonus of 10 percent of base salary, second levels get 14 percent and third levels get 18 percent.
If performance excels, the plan sets the maximum bonus at twice each of those percentages.
This year, the very different base-target figures for the engineers and the managers will be multiplied by the identical 1.25 factor.
The discrepancy in the size of the bonuses is adding to the irritation felt by many engineers when they learned this month that, despite Boeing’s record profits in 2014, their bonuses would be well below the maximum 20-day payout.
In a message to employees earlier this month, Boeing Commercial Airplanes chief Ray Conner acknowledged that “many team members have reached out to me expressing disappointment.”
In explaining the shortfall, Conner’s message to employees mentioned three specific areas where performance had been lacking: Some aircraft were delivered late in 2014; earnings on the 787 program were reduced by high spending needed to stabilize production; and problems on the 767 Air Force tanker program led to a big accounting charge.
Another veteran company engineer, via email, said all these issues “were, frankly, based on management decisions.”
He questioned the comparatively large boost to the managers’ bonuses, “even though they are part of the problem.”
Information in this article, originally published Feb. 20, 2015, was updated Feb. 27, 2015 to add detail about managers losing their overtime pay in 2014.
Information in this article, originally published Feb. 20, 215, was updated Feb. 27, 2015 to add detail about managers losing their overtime pay in 2014.