By Valerie Insinna and David Shepardson
(Reuters) -Boeing on Friday awarded Chief Executive Dave Calhoun an incentive worth approximately $5.29 million to induce him to stay throughout the company's recovery from the twin crises of the COVID-19 pandemic and two deadly 737 MAX crashes that led to the fleet’s grounding.
Boeing (NYSE:BA)'s board of directors on Feb. 16 approved giving 25,000 in restricted stock units to Calhoun, which will vest in two installments on the first and second anniversary of the grant, according to regulatory filings by the company published on Friday.
The move suggests Boeing's current board of directors may not seek to replace Calhoun with a new CEO until at least the mid 2020s, when the company is expected to return to pre-pandemic production rates.
"This retention grant reflects the Board’s continued confidence in Dave’s leadership and the direction of the company as we make important progress toward restoring our operational and financial strength, guided by our focus on safety, quality and transparency," Boeing said.
Boeing shares, which have risen by nearly 70% since early October, were down 55 cents to close at $211.66 on Friday before the announcement.
Calhoun was Boeing chairman and then became CEO in January 2020 after the board fired Dennis Muilenburg. Calhoun had total compensation of $21.1 million in both 2020 and 2021. In 2021, the board approved a long-term incentive award target of $16 million.
In April 2021, Boeing extended its required retirement age of 65 to 70 to allow Calhoun to stay in the top job. Calhoun turns 66 in April.
The award to Calhoun comes just weeks after Boeing reported its first yearly positive cash flow since 2018.
Calhoun has made boosting free cash flow the major financial target for the company as it seeks to recover from supply chain struggles caused by the pandemic and boost production of its 737 MAX and 787 jetliners. Boeing hopes to increase cash flow from $2.3 billion in 2022 to between $3 billion and $5 billion in 2023.