Boeing Boeing Gone?

Overview of Boeing and its governance

• Started in 1916 by William E Boeing
• Currently 170,000 staff in the USA and 65 countries
• Merged with McDonnell Douglas in August 1997 which was a turning point in Boeing’s fortunes
• After 2010, Boeing never mentioned safety in its board statement for four years which indicates its priorities

Boeing’s problems

• Two 737 Max crashes in 2018
• Subsequent lawsuits against the company directors in 2021
• A door panel fell off a 737 Max in January 2024
• It has lost $25 billion in the last 5 years
• In 2024 they had their first strike in 16 years
• They’ve had numerous investigations by a US regulator
• New York Times story claims they had ‘a culture that often valued production speed over quality’

Board in 2019 and beyond

• The CEO and Chair were the same person since Boeing started which isn’t good governance practice until 2019
• Only recently hired directors with engineering, risk management, safety and aviation
• Up until 2019, there was no emphasis on safety

Board failings per FAA 2021 report

• Failed to monitor and report safety at board level
• No reporting to the board about safety
• The board never learned about any whistleblower safety complaints
• After the McDonnell Douglas merger, the emphasis was on shares rather than quality and safety
• Boeing adopted an aggressive schedule to develop 737 Max in response to the French-made Airbus

Leadership

• The chair and CEO should be separate – it’s critical for accountability. In March 2024, a new CEO was brought in and an independent Chair was also brought in
• There is a lighter touch governance in the USA when compared to governance in Europe

Board composition

• What a non-executive director could learn from good due diligence on an organisation like Boeing
  • Separate chair/CEO role?
  • Values and culture
  • Regulator views
  • What did the last board evaluation reveal?
  • Director tenure
  • What do former directors/senior executives say
  • Board oversight of core business
  • Post-merger history – is it going well or not?

Thoughts on future governance for Boeing

• There needs to be an annual external board evaluation
• There needs to be annual chair and director evaluations
• Full disclosure in the annual report, on the website, on the role and activities of the board committees, especially on safety
• The director of compensation should be tied to measurable governance improvements
• They need to ensure they are carrying out a cultural audit

The Boeing Company has been in the headlines for all the wrong reasons over the last five years –  the 737 Max disasters, doors falling off, governance challenges, strikes and redundancies. which may lead the company into Chapter 11 in the USA.

In this webinar we’ll explore how an organisation of Boeing’s stance could end up in this position. We’ll examine Boeing’s governance, its leadership and where it all went wrong.  

What you’ll take away from this webinar:

• Governance of Boeing: An insight into how the governance structures of Boeing have evolved and the mistakes made.
• Leadership: The weaknesses in Board leadership and whether combining the roles of the Chair and the CEO is a good idea.
• Board composition: What a non-executive director could learn from good due diligence on an organisation like Boeing.
• Future for Boeing: Our thoughts on what governance changes, if any, are required so that Boeing can survive and hopefully fly high again.

Looking to become a non-executive director? As you’ll learn from this case study, never assume that large organisations have good governance!

David W. Duffy is Co Founder and Chair of the Corporate Governance Institute.