In rebuke, shareholders vote to separate top Boeing roles

A majority of Boeing Co. shareholders voted to separate the chief executive officer and chairman roles permanently, sending a rebuke to the plane-maker’s leadership at its annual general meeting.

The proposal for an independent chairman, which was opposed by management, garnered 52% of shareholder votes, Boeing said Monday. A measure that would have allowed investors to raise matters outside the normal annual meeting cycle got 43% of votes in favor — an unusually high level of support for an ini

tiative not recommended by company leaders.

While the votes aren’t binding, they sent a clear message to the board that large institutional shareholders want more accountability after two deadly crashes of Boeing’s 737 Max plunged the company into a deep crisis. The board had resisted calls to require an independent chairman even after establishing an outsider, Larry Kellner, in that role as part of a shake-up after Boeing’s botched handling of the accidents.

“Shareholders want greater oversight of Boeing management,” shareholder activist John Chevedden said in response to the vote. Breaking with tradition, the session was held online due to the coronavirus pandemic.

While splitting the chairman and CEO roles has gained popularity at other leading U.S. companies, Boeing’s directors warned in the 2020 proxy statement that the measure would “impose irrevocable limits on the board’s future flexibility.” After the vote, Kellner said the company would take the advisory votes into account.

“We’ll continue to use your feedback to inform decision-making going forward,” he said. “I thank the shareholders for input and ongoing dialog we have with them.”

Boeing’s slate of director nominees was reelected at the meeting, despite taking fire for being slow to intervene as the company spiraled into crisis after regulators grounded the 737 Max, the company’s biggest source of revenue.

Kellner responded to another criticism — the shortage of aerospace experience on the board — by vowing to recruit more directors with an engineering background.

Proxy adviser Glass Lewis & Co. had recommended that Boeing shareholders not reelect Kellner, who until recently led a committee tasked with risk management. Institutional Shareholder Services Inc. had also urged investors to vote against Arthur Collins, Edmund Giambastiani, Susan Schwab and Ronald Williams for failing in their oversight of the Max crisis.

During the session, Dave Calhoun, a longtime director who stepped in as CEO in January, warned that the Chicago-based company faces a shrinking commercial market from a global pandemic, and uncertainty regarding when the situation will stabilize.

Air travel won’t return to 2019 levels for at least two to three years, crimping demand for jetliners, he said.

“As the industry recovers, slowly at first and then with greater vigor, we’ll be ready with a diverse portfolio of products and services that our customers want and need,” he said.

Nikki Haley, a former U.N. ambassador and South Carolina governor, resigned from the board last month, saying she opposed Boeing’s effort “to lean on the federal government for a stimulus or bailout” to cope with the virus pandemic, which has caused air traffic in the U.S. to plunge about 95% and led global airlines to ground 2,800 planes and delay plans to buy new ones.

Boeing is expected to apply for a share of $17 billion in low-interest loans that Congress and the Trump administration set aside for defense companies.

Last week, the company resumed production in Seattle-area plants that had been shut down after workers tested positive for the virus that causes covid-19.

Calhoun said it will take years for the aircraft-building business to return to levels

seen before the pandemic.

“It is difficult to estimate when the situation will stabilize,” he said, “but when it does, the commercial market will be smaller and our customers’ needs will be different.”

Calhoun said the company’s defense business remains healthy.

Boeing is scheduled to report first quarter earnings on Wednesday. The company is coming off its first moneylosing year in two decades because of the Max crisis, and analysts surveyed by FactSet expect a first quarter loss of more than $500 million, or $1.57 per share.

Boeing shares have dropped about 60% this year. Information for this article was contributed by Julie Johnsson of Bloomberg News and by David Koenig of The Associated Press.