- BoeingCEO Dennis Muilenburg lost his additional title as chairman of the company’s board last week, as the board decided to split the jobs into two separate roles.
- The company said that it maintains full confidence in Muilenburg, and that the move was meant to allow him to focus more on the day-to-day operations as the company works to get the troubled 737 Max back in the air.
- In an interview with Business Insider, Courteney Keatinge, the head of environmental, social, and governance research at Glass Lewis explained that the move has her feeling more confident in the company’s stability and direction.
- Visit Business Insider’s homepage for more stories.
Boeing CEO Dennis Muilenburg lost his title as chairman of the company’s board late last week, nearly a year after the first of two fatal crashes of the 737 Max aircraft sent the company into a tailspin.
Muilenburg retains his position as CEO following the board’s decision to split the two jobs into separate roles. David L. Calhoun, a board member, was elected to serve as non-executive chairman.
“The board has full confidence in Dennis as CEO and believes this division of labour will enable maximum focus on running the business with the board playing an active oversight role,” Calhoun said in a statement.
As Boeing scrambles to get the 737 Max passenger jet, which has been grounded worldwide since mid-March, back into service, the board’s decision raised questions about Muilenburg’s future at the company, and Boeing’s recovery prospects as it faces numerous investigations and lawsuits by victims’ families and airline customers.
Some view the move as a punitive measure or an effort by the company to lay groundwork for a leadership change, but there is no known consensus about whether that is a likely outcome.
Business Insider spoke with Courteney Keatinge, the head of environmental, social, and governance research at Glass Lewis, one of the largest and most influential proxy advisor firms for insight about what’s on the horizon for Boeing.
“Sometimes this kind of transition happens when a CEO is stepping off the board or stepping down as CEO,” she said. “But this does not appear to be the case in this instance,” Keatinge told Business Insider.
A new focus on the day-to-day
Boeing is currently finalising its proposed fixes to the flight computers on the 737 Max and software systems to prevent the errors that led to the two deadly crashes in October 2018 and in March. Reports indicate Boeing has not yet submitted its final recertification package to the FAA, despite saying this summer that it would do so by September; the planemaker has indicated that it still expects the plane to be brought back into service by the end of the fourth quarter.
American Airlines, which has 24 of the jets, and 76 more on order, has said that it expects to begin reintroducing the Max into service on January 16.
Meanwhile, Boeing is in a position of needing to placate FAA officials and international regulators, who have been hinting that they may conduct independent examinations of the 737 Max jet, rather than relying solely on the FAA’s findings, before allowing it to fly again.
The company is also struggling to get its next-generation 777X program completed and certified, and deciding on how to proceed developing an aircraft to replace ageing 757 fleets around the world – an “NMA,” or new midsize aircraft.
Additionally, it needs to secure more orders for its 787 Dreamliner, as its current order book will require it to slow production in a few years if it continues to stand. The company’s defence arm is also working to build new products and solve quality problems with others, including the troubled KC-46 tanker, a military variant on the commercial 767.
A safety panel recently appointed by Boeing’s board called for more top-down oversight and changes to engineering reporting structures in order to emphasise safety considerations in design and construction.
“It sounds like what they’re doing will allow him to focus a lot more on the operational aspects as opposed to the strategic aspects of the company,” Keatinge said. “What a board is supposed to do is set the strategic direction of the company, and the chief executive sets the day-to-day operations in line with those strategic objectives.”
“I’m assuming that he’ll still have a place on the board, he just won’t be the chairman. Likely he’ll still be involved in those [strategic] conversations, and I’m assuming he’ll still be a voting member,” she said.
What comes next
What happens next for Muilenburg – who began his career with Boeing in 1985 and became CEO in 2015 – is not immediately apparent, despite Calhoun’s statement, issued by Boeing, that the board has full confidence in Muilenburg.
However, Keatinge said that she does not see any reason to assume that he’s heading toward the exit, nor that the move is a punitive measure. Notably, Boeing had considered separating the roles in the past.
“It’s common for one of the roles to be given to someone else in the event of a CEO transition, but it doesn’t sound like that’s the case here,” she said. “This move shows responsiveness to the company’s issues, particularly given that shareholders have been pushing Boeing to separate these roles for a number of years.”
“It seems like right now, Boeing’s not going to want a lot of disruption and shakeup,” she added,” because it seems like they’re doing a lot to address various issues in terms of reporting safety issues, whistleblower mechanisms, and more.”
Keatinge said she believes Boeing is showing that issues surrounding operational safety are a core concern with regard to Muilenburg’s removal from the chairman role.
Boeing’s board said in late September that it had created a permanent safety committee to oversee development, manufacturing, and operation of its planes and services.
“The board also plans in the near term to name a new director with deep safety experience and expertise to serve on the board and its newly established Aerospace Safety Committee,” Calhoun, the new non-executive chairman, said in last week’s announcement.
“I always get nervous when a board appoints an expert, because I worry that the expertise will be siloed, rather than considered the purview of the whole board,” Keatinge said.
“But I am optimistic since they created the new aerospace safety committee. I’ll be watching very closely over the next year.”