The Boeing Co., stunned by its first annual loss in 50 years, has frozen the salaries of its executive officers and cut bonuses by half for most of its 1,500 top managers.
A senior manager who agreed to discuss the action on the condition that his name not be used said the executive suite pay freezes were the first such action since the early 1970s.
He said bonuses hadn’t been cut in at least 10 years.
“These actions reflect the fact that we’re a company in transition,” the manager said. “We were very successful in some areas, but we fell far short of our goals in others.”
The major failures centered around production bottlenecks in Boeing’s Commercial Airplane Group, which cost the company $1.4 billion last year and may cost another $1 billion this year.
The compensation committee of the company’s board of directors is responsible for determining the pay and other awards given to top executives. The five members of that committee - none of whom works for Boeing - voted to cut bonuses and freeze pay levels for three of the four men at the top:
Chairman and CEO Philip M. Condit had his total compensation cut by $48,000.
Boyd E. Givan, senior vice president and chief financial officer, took the biggest financial hit, with a total reduction of $170,000.
Ron Woodard, president of the Commercial Airplane Group, saw his total compensation drop by $153,000.
President and COO Harry Stonecipher - until last August president and CEO of McDonnell Douglas, with which Boeing merged - was not considered responsible for the 1997 loses. And his salary and benefits were guaranteed under the merger agreement.
The cuts didn’t stop with the executive suite.
About 1,500 managers from what the company calls “Heritage Boeing” - meaning Boeing before it bought part of Rockwell International and merged with McDonnell Douglas - are eligible for annual performance bonuses. Virtually all of them had their bonuses cut, the senior manager told The Tacoma News Tribune.