Boeing shares drop 4% after the shock retirement of the CFO, the CEO extended
© Reuters. Boeing CFO Greg Smith is seen during the 53rd Paris International Air Show at Le Bourget Airport near Paris
By Sanjana Shivdas and Eric M. Johnson
(Reuters) -Boeing Co announced the resignation of its chief financial officer Greg Smith for the past decade, and the crisis-hit jetmaker’s shares fell 4%, despite the fact that it signaled stability through the renewal of its chief executive officer.
Boeing (NYSE 🙂 extended its mandatory retirement age from 65 to 70 to allow CEO Dave Calhoun to stay in the top job while the U.S. aircraft maker struggles to recover from the coronavirus and 737 MAX crisis and manufacturing defects in its aircraft programs. [L1N2M91WF]
Shares fell, however, as investors were shaken by the surprise resignation of Smith, 54, Boeing’s face in financial markets, during one of the most tumultuous periods in its history. This was marked by a security crisis followed by rising debt during the pandemic.
Calhoun told shareholders at the annual meeting that Boeing would have positive cash flow in the short or medium term and will give priority to repay its debt when the travel markets and aircraft demand recover. Boeing has seen signs of a recovery in the single aisle market.
In midday trading, stocks fell roughly 4% to $ 234.41.
Smith, a 30-year Boeing veteran scheduled to retire in July, led the largest bond offering in the company’s history and led a business transformation with cost-cutting and blending resources to empower Boeing in the wake of the COVID-19 and 737 crises MAX slacken.
Many in the industry saw Smith as the future CEO when Boeing saw record high production and share prices through 2019. However, some at the company criticized its policy of regular share buybacks, saying there were insufficient resources to handle the severe downturn.
The European rival Airbus SE (OTC :), on the other hand, weathered the crisis comparatively well and at the same time maintained higher research spending.
Even so, Smith faced two unprecedented overlapping crises – the slump in income related to the lengthy creation of the 737 MAX after fatal accidents and the global pandemic that hit airlines around the world.
Smith decided to retire himself, said two people familiar with his thinking.
Smith was named chief financial officer in 2011. He then held additional roles as Executive Vice President of Finance, Corporate Performance and Strategy, and then Executive Vice President of Enterprise Operations, Finance and Sustainability.
Prior to becoming CFO, he was Corporate Controller and Vice President of Finance, Boeing’s primary liaison with the Board of Directors’ Audit Committee for Regulatory Compliance.
Calhoun, former Blackstone (NYSE 🙂 Private Equity Group executive and seasoned corporate crisis manager and board member of Boeing’s 2009 board member, was named CEO in December after the board ousted Dennis Muilenburg.
This came after Calhoun was named chairman in October 2019. He gave up the chair when he became CEO.
Calhoun told staff in January that he saw “opportunities to get better. Much better”.
In January, the board approved an annual salary of $ 1.4 million for Calhoun and long-term compensation of $ 26.5 million for meeting multiple milestones.
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