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Boeing's new CEO will get a R101 million payout if he successfully gets the troubled 737 Max flying again

Rosie Perper , Business Insider US
 Jan 14, 2020, 08:36 PM
An undelivered TUI Boeing 737 Max plane at a Boeing employee parking lot in Seattle in June.
Stephen Brashear/Getty Images
  • Boeing's new CEO David Calhoun took over the leadership position on Monday, after his predecessor Dennis Muilenburg was ousted over his handling of two fatal crashes involving the company's 737 Max aircraft.
  • Calhoun stands to gain a bonus that is five times the rate of his base salary if he can ensure the 737 Max returns to service.
  • Returning the plane to service will be a challenging task, considering the plane has been grounded since March and has tarnished the company's safety reputation.
  • For more stories go to www.BusinesInsider.co.za.

Boeing's new CEO David Calhoun took over the leadership position on Monday, replacing former CEO Dennis Muilenburg. Calhoun is tasked with reviving the company's reputation, following two fatal crashes involving the company's newest aircraft the Boeing 737 Max jet.

But if Calhoun can manage to lift the troubled company up - specifically, ensuring a return to service for its best-selling 737 Max - he could stand to gain a bonus that is five times the rate of his base salary.

Calhoun's pay package was disclosed by Boeing in a filing with the American Securities and Exchange Commission on Friday evening. According to the filing, Calhoun will receive a base salary at an annual rate of $1.4 million (R20 million). In addition, he is eligible to receive several bonuses, including at least $2.5 million (R36 million) as a guaranteed cash bonus, and a $7 million (R101 million) payout for the "full safe return to service" of the Max plane.

And although Calhoun is referred to as a "turnaround specialist" within his industry, returning the plane to service will be a challenging task, considering the plane has been grounded since March after faulty software led to the deaths of a combined 346 people within a five-month period. The plane thus far has no firm return date and the company has stopped building new ones.

Two members of Congress investigating the 737 Max crisis recently accused Boeing of "deliberate concealment" of the aircraft's troubled new software, and last week the company was dealt another blow after damning internal emails released by Boeing to Congress revealed that employees within the company mocked the Federal Aviation Administration and discussed security concerns related to the 737 Max.

"This airplane is designed by clowns who in turn are supervised by monkeys," one employee wrote in an instant message," one employee wrote in a message about the 737 Max.

Payout conditions for Muilenburg, who lost his job for poor handling of the fatal crashes, were also detailed in the filing. And although Boeing stripped him of his bonus, any severance pay, and other incentives worth nearly $15 million (R216 million), Muilenburg was given a payout package worth $62 million (R895 million) made up of Boeing stock, pension payments, and other deferred contributions.

The financial packages of both men were disclosed on the same day that Spirit AeroSystems, a Kansas-based manufacturer which received a significant portion of its revenue from the embattled 737 Max, announced layoffs for 2,800 workers at its Wichita facility.

Still, Calhoun remains confident that he was up to the task of reviving the 737 Max. In an email to employees on Monday, Calhoun said that the 737 Max's safe return was a "primary focus."

"We'll get it done, and we'll get it done right," he wrote.

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