When it comes to big companies like Boeing, their success or failure is often judged by how well their stocks perform.
And if you look at Boeing’s stock prices during Dave Calhoun’s time as CEO, it’s fair to say it hasn’t been all smooth sailing.
Just recently, Calhoun made an announcement that caught the attention of many: he’s planning to step down from his position by the end of this year. But here’s the exciting part – Boeing’s board hasn’t yet named someone to take his place.
Running a giant company like Boeing is no walk in the park.
Calhoun stepped into the CEO role right in the middle of a major crisis: the grounding of the 737 MAX planes after two tragic crashes happened in quick succession.
And as if that wasn’t challenging enough, the Federal Aviation Administration (FAA) put further pressure by limiting the production of 737 MAX jets to just 38 per month.
This decision came after a scary incident where an emergency door plug blew out during a flight in January. The FAA is demanding that Boeing improve the quality of its production before allowing it to increase the production rate again.
Now, when a big company like Boeing goes through a leadership change, it’s like hitting pause and taking a closer look at what’s happening behind the scenes.
And for investors, this transition is a prime opportunity to ask themselves, “Are we getting our money’s worth?” And let me tell you, the numbers for Dave Calhoun aren’t painting the rosiest picture.
Back in January 2020, when Calhoun officially took the reins as CEO, Boeing’s stocks were trading at around $330 each. Fast forward to now, and they’ve taken a nosedive to about $191 each. That’s a whopping 40% drop. Meanwhile, Airbus increased by about 26% during Calhoun’s time at the helm.
Now, let’s talk money. Calhoun has pocketed a cool $65 million for steering the Boeing ship, and that’s just up until 2022.
Companies usually spill the beans on executive pay in their annual reports. Still, we’ll have to wait a bit for Boeing’s 2024 report to hit the shelves.
But here’s the breakdown: Calhoun’s base salary is around $1.4 million a year, and he’s eyeing an annual bonus target of roughly $17 million. That’s some serious cash, no doubt about it.
When asked about Calhoun’s hefty paycheck, Boeing chose to stay mum. No comment.
Let’s peel back the curtain on how CEOs like Dave Calhoun rake in those eye-popping paychecks.
You see, this fancy-schmancy board compensation committee at Boeing sits down, crunches numbers, and plays a game of “Let’s see what the other big shots are making.”
They look at companies like 3M, Ford Motor, Procter & Gamble, RTX, Caterpillar, and even the tech giant Microsoft.
These are Boeing’s peers, the big players in the business world. And get this: in 2023, the CEOs of these companies were raking in an average of a whopping $25 million each! And here’s the kicker – they were pulling in all that dough for what some might call a “pretty average” performance.
Now, let’s put things into perspective. If you had invested in the S&P 500 over the past five years, you’d be popping champagne now because your money would have doubled. That’s an impressive 15% return per year! Not too shabby.
If we look at Boeing’s peers – those six companies we mentioned earlier – they’ve nearly doubled investor money, too, but at a slightly slower rate, gaining just over 13% per year.
But when it comes to Boeing? Well, let’s say investors haven’t been so lucky. Boeing’s stock has taken a nosedive, losing investors roughly 50% over the same period, averaging a dismal 12% loss per year.
Let’s not judge a CEO solely by what Wall Street thinks, right? Stock market returns carry much weight in the business world, but they’re not the whole story. Still, it’s no secret that Wall Street loves to monitor those numbers.
Analysts threw around names like Larry Culp, the head honcho over at General Electric, and Bill Brown, the former bigwig at L3Harris Technologies, when asked who could step up to the plate as Boeing’s next CEO.
Let’s talk about Larry Culp and Bill Brown – two heavy hitters in the aerospace world who’ve got the chops to lead Boeing. These guys aren’t just CEOs – they’re CEOs who know their way around the skies if you catch my drift.
Take Larry Culp, for example. Since he swooped in and took the reins at General Electric in October 2018, GE’s stock has been on a rocket ride, blasting off by nearly 140%! That’s an average annual gain of about 18%, which, in investor speak, is pretty darn impressive.
And then there’s Bill Brown. During his time as the big cheese at L3Harris Technologies from 2011 to 2022, the company’s stock didn’t just climb – it soared to new heights, growing more than eight times its original value!
That’s like hitting the jackpot in the stock market, folks. And to top it off, investors were pocketing upwards of 20% a year on average.
Now, let’s be honest: Larry and Bill wouldn’t be the top picks for Boeing’s CEO gig if they hadn’t delivered the goods.
You don’t become the talk of the town in CEO circles unless you’re making some serious waves in the stock market. And with numbers like these, it’s no wonder they’re at the top of the list.
With a new leader at the helm, Boeing has the opportunity to chart a course for continued success in the dynamic aerospace industry.
The coming months will be telling as the board deliberates, and all eyes will be on who they select to navigate Boeing through the next chapter.
