Increase comes despite plummeting stock price, order decline
PITTSBURGH – Boeing Co.’s chief executive, Jim McNerney, received compensation valued at $14.8 million in 2008, up 14 percent from the previous year, according to an Associated Press calculation of figures disclosed in a regulatory filing Friday. But some of the compensation came in stock options that have declined in value.
The Chicago-based company, which makes passenger, freight and military jets, has faced weakening demand for its products as air travel wanes and airlines cut costs amid the global economic slowdown. Boeing reported a surprise fourth-quarter loss and saw its orders plunge in 2008 following three years of robust bookings.
McNerney, also the airplane maker’s chairman and president, received $1.9 million in base salary, according to a proxy statement filed with the Security and Exchange Commission.
He received performance-related bonuses totaling $6.1 million, including a $1.5 million cash bonus based on 2008 performance and a long-term incentive bonus of $4.6 million based on Boeing’s cumulative performance for 2006, 2007 and 2008. McNerney asked the board of directors to place more weight on the company’s 2008 results more heavily in the calculation, resulting in a lower amount than he would have been eligible for, according to a company spokesman.
About 40 percent of McNerney’s total compensation was in the form of stock and stock options, valued by Boeing at $5.9 million when they were granted. But that amount came from stock options granted in February 2008, when Boeing stock traded at $84.66. The company’s shares closed Friday at $33.40.
Included in McNerney’s pay package was $287,062 for personal use of company aircraft, $67,157 for personal legal fees and $57,994 for personal use of a car and driver.
The Associated Press’ compensation formula is designed to isolate the value the company’s board placed on the executive’s total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
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