Boeing recently disclosed that they had wrongly classified $500,000 worth of personal trips for executive staff, amid ongoing problems for the company.
Half a Million Undisclosed
During an internal review, aviation giant Boeing admitted to spending $500,000 more on executive private jet flights than had been previously disclosed.
Perks of the C–Suite
Chief Executive David Calhoun and a number of other high-ranking C-suite executives received an extra $500,000 in compensation for the personal use of private jets and other corporate aircraft.
Recorded Incorrectly
These funds had previously been incorrectly recorded as business expenses. It was amended by the recent review, which was in turn prompted by a Wall Street Journal investigation.
Wall Street Journal Investigation
Last year the WSJ launched an inquiry into how C-suite executives at Boeing use their fleet of private jets and other aircraft. Boeing then disclosed a company filing with the amending the amount.
Flight Destinations
These flights were made between permanent and temporary residences, work sites, vacation destinations, and other locations for both personal and business trips.
To Work Via Private Jet
The WSJ article, published in September, also detailed the frequent use of private jets to fly executives back and forth from their homes in other parts of the country to the Boeing headquarters in Arlington, Virginia. The CEO had chosen to fly to HQ by private jet rather than relocate.
CEO Addresses Article
Calhoun addressed the article during a company meeting in November, telling executives that he wanted them to travel from their homes to company operations.
“This Is What I Want to Do”
“I don’t want anybody […] to misinterpret a silly article that got published in The Wall Street Journal about me traveling a lot,” he said. “That’s my objective. That is what I want to do. That is what I want everybody at the enterprise level to do.”
Should Have Been Perquisites
The filing, made on April 5, disclosed that a number of flights “were not previously classified as perquisites by the company but should have been classified as such in accordance with SEC rules and guidance.”
Perks For Execs
Perquisites, otherwise known as perks, are benefits given to executives that include meals, ground transportation, and accommodation during trips.
Strict Compliance?
The recent admission came after Boeing had previously confirmed that they had correctly recorded and classified all executive aircraft use, stating that “As it relates to the tracking and categorization of flights, we have professionals and subject matter experts who help us strictly comply.”
$1.9 Million For Personal Travel
This means that between 2021 and 2024, Boeing has spent $1.9 million on personal air travel for its top four executives. This includes Calhoun, CFO Brian West, previous commercial airplane unit CEO Stan Deal, and defense, space and security CEO Theodore Colbert.
2021 to 2023
With adjustments made to include the recent disclosure, that means Boeing spent $306,000 on flights for the four in 2021, $734,000 in 2022, and $872,000 in 2023.
Contractual Obligations
However, it should be noted that Calhoun’s contract with Boeing specifies that he must use the company’s private jet for all business and personal travel.
Another Gaffe For Boeing
It’s another unfortunate headline for the aircraft manufacturer, which has been embroiled in a series of controversies and business woes since the beginning of the year.
Alaska Airlines Blowout
Most notable was a serious blowout on board an Alaska Airlines flight from Portland, Oregon to Ontario, California in early January. A door plug was blown off the side of the aircraft mid-flight.
Aircraft Safety Called Into Question
The hole in the fuselage forced an emergency landing of the Boeing 737 Max 9, leaving passengers and flight staff shaken and terrified. The incident then made headlines around the world, calling the model’s safety into question.
Federal Investigation Launched, Planes Landed
Outside of the increasingly bad publicity, Boeing was then hit with a series of federal investigations and the landing of a large fleet of 737 Max 9 which cost both the company and a number of airlines millions of dollars.
$160 Million in Compensation So Far
Earlier this month it also made a $160 million payment to Alaska Airlines to make up for quarterly financial losses from the blowout event. Extra compensation is likely to be made in the coming months.
Resignation Pending
What’s more, Calhoun announced his resignation in March, with the intention of leaving the company at the end of the year. Commercial airplane unit CEO Deal retired immediately around the same time.
Calhoun Declines Bonus
Due to these serious security concerns and bad publicity, Calhoun declined to accept his annual incentive bonus, worth around $2.8 million, on top of his total compensation of $32.8 million for 2023.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
