Research summary
Research summary
Topic summary
Boeing's decline began when the 1997 merger prioritized share buybacks, outsourcing, and cost-cutting over engineering excellence.
Key research questions
- Investigate "How Did Boeing Go From Engineering Icon to Crisis?" from this distinct point of divergence: 1997 Merger and Shareholder Primacy.
Important claims and supporting citations
On December 17, 2018, less than two months after the Lion Air Flight 610 crash, Boeing approved a new $20 billion share repurchase authorization and announced buybacks would resume in January 2019.
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://boeing.mediaroom.com/1997-08-04-The-New-Boeing-Begins-Operations-as-a-Single-Company
In 2001, Boeing technical fellow L.J. Hart-Smith presented an internal paper warning that aggressive outsourcing could transfer technical competence and profits to suppliers while leaving Boeing responsible for integration and rescue costs.
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://boeing.mediaroom.com/1997-08-04-The-New-Boeing-Begins-Operations-as-a-Single-Company
Upon entering the combined Boeing following the merger, Harry Stonecipher held 477,415 Boeing stock equivalents, 78,000 restricted shares, and options on 1.17 million Boeing shares.
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://boeing.mediaroom.com/1997-08-04-The-New-Boeing-Begins-Operations-as-a-Single-Company
Boeing Commercial Airplanes' research and development expenditures dropped 42.7% in a single year, declining from $1.021 billion in 1998 to $585 million in 1999.
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://boeing.mediaroom.com/1997-08-04-The-New-Boeing-Begins-Operations-as-a-Single-Company
From 2013 through 2019, during the 737 MAX development and certification period, Boeing distributed approximately $60.5 billion to shareholders, comprising $43.1 billion in share repurchases and $17.4 billion in dividends.
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://boeing.mediaroom.com/1997-08-04-The-New-Boeing-Begins-Operations-as-a-Single-Company
Former McDonnell Douglas CEO Harry Stonecipher stated in a 2004 Chicago Tribune interview that he wanted Boeing run 'like a business rather than a great engineering firm.'
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://boeing.mediaroom.com/1997-08-04-The-New-Boeing-Begins-Operations-as-a-Single-Company
In 2011, Boeing disclosed in SEC filings that roughly 80% to 90% of named executive officers' pay opportunities were variable and tied to share price appreciation and 'economic profit' targets.
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://www.sec.gov/Archives/edgar/data/12927/000001292703000005/boeing10k_123102.htm
Between 1998 and 2018, Boeing spent roughly $61 billion on stock repurchases, amounting to 81.8% of its cumulative net income, with total buybacks and dividends equaling about 121% of profits.
- https://investors.boeing.com/investors/news/press-release-details/2018/Boeing-Board-Raises-Dividend-20-Percent-Increases-Share-Repurchase-Authorization-to-20-Billion/default.aspx
- https://boeing.mediaroom.com/2000-12-21-Boeing-Completes-15-Percent-Share-Repurchase-Program
- https://boeing.mediaroom.com/1997-08-04-The-New-Boeing-Begins-Operations-as-a-Single-Company
View all claims (text)
Claims
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Boeing relocated its corporate headquarters from Seattle to Chicago in 2001 to distance executive leadership…
Boeing relocated its corporate headquarters from Seattle to Chicago in 2001 to distance executive leadership from its Washington state commercial manufacturing operations.
Labels: Source-linked, Low, known
Internal Boeing messages from 2018 released in January 2020 included an employee remark that the 737 MAX was…
Internal Boeing messages from 2018 released in January 2020 included an employee remark that the 737 MAX was 'designed by clowns who in turn are supervised by monkeys.'
Labels: Inferred, Low, known
Under CEO Jim McNerney, Boeing established the 'Partnering for Success' program, which demanded double-digit…
Under CEO Jim McNerney, Boeing established the 'Partnering for Success' program, which demanded double-digit cost reductions year-over-year from suppliers.
Labels: Inferred, Low, known
In June 2005, Boeing sold its commercial aerostructures facilities in Wichita, Tulsa, and McAlester for appro…
In June 2005, Boeing sold its commercial aerostructures facilities in Wichita, Tulsa, and McAlester for approximately $900 million in cash, transferred liabilities, and long-term supply commitments.
Labels: Source-linked, Low, known
In March 1998, Boeing announced plans to eliminate roughly 18 million square feet of facilities (over 15%), c…
In March 1998, Boeing announced plans to eliminate roughly 18 million square feet of facilities (over 15%), close redundant laboratories, and eliminate approximately 8,200 jobs.
Labels: Source-linked, Low, known
Former McDonnell Douglas CEO Harry Stonecipher stated in a 2004 Chicago Tribune interview that he wanted Boei…
Former McDonnell Douglas CEO Harry Stonecipher stated in a 2004 Chicago Tribune interview that he wanted Boeing run 'like a business rather than a great engineering firm.'
Labels: Source-linked, Low, known
Boeing Chief Technical Pilot Mark Forkner bragged in internal emails about using 'jedi mind tricking' on regu…
Boeing Chief Technical Pilot Mark Forkner bragged in internal emails about using 'jedi mind tricking' on regulators to avoid requiring flight simulator training for the 737 MAX.
Labels: Inferred, Medium, known
Post-merger corporate metrics under Harry Stonecipher shifted Boeing toward Jack Welch-style GE management an…
Post-merger corporate metrics under Harry Stonecipher shifted Boeing toward Jack Welch-style GE management and Return on Net Assets (RONA).
Labels: Inferred, Low, known
Following the 1997 merger, former McDonnell Douglas executives assumed a disproportionate share of top execut…
Following the 1997 merger, former McDonnell Douglas executives assumed a disproportionate share of top executive posts at Boeing.
Labels: Inferred, Low, known
Boeing Commercial Airplanes' research and development expenditures dropped 42.7% in a single year, declining…
Boeing Commercial Airplanes' research and development expenditures dropped 42.7% in a single year, declining from $1.021 billion in 1998 to $585 million in 1999.
Labels: Source-linked, Low, known
737 MAX Sensor and MCAS Safety Architecture
737 MAX Sensor and MCAS Safety Architecture
Labels: Inferred, Low
Executive Compensation Structure
Executive Compensation Structure
Labels: Inferred, Low
737 MAX Development Decisions
737 MAX Development Decisions
Labels: Inferred, Low
Share Repurchases and Capital Distributions
Share Repurchases and Capital Distributions
Labels: Inferred, Low
787 Dreamliner Outsourcing Model and Challenges
787 Dreamliner Outsourcing Model and Challenges
Labels: Inferred, Low
In 2011, Boeing disclosed in SEC filings that roughly 80% to 90% of named executive officers' pay opportuniti…
In 2011, Boeing disclosed in SEC filings that roughly 80% to 90% of named executive officers' pay opportunities were variable and tied to share price appreciation and 'economic profit' targets.
Labels: Source-linked, Low, known
Between 1998 and 2018, Boeing spent roughly $61 billion on stock repurchases, amounting to 81.8% of its cumul…
Between 1998 and 2018, Boeing spent roughly $61 billion on stock repurchases, amounting to 81.8% of its cumulative net income, with total buybacks and dividends equaling about 121% of profits.
Labels: Source-linked, Low, known
From 2013 through 2019, during the 737 MAX development and certification period, Boeing distributed approxima…
From 2013 through 2019, during the 737 MAX development and certification period, Boeing distributed approximately $60.5 billion to shareholders, comprising $43.1 billion in share repurchases and $17.4 billion in dividends.
Labels: Source-linked, Low, known
In 2011, Boeing chose to develop the 737 MAX derivative at an estimated cost of approximately $3 billion inst…
In 2011, Boeing chose to develop the 737 MAX derivative at an estimated cost of approximately $3 billion instead of pursuing a clean-sheet narrow-body aircraft estimated at $10 billion.
Labels: Source-linked, Low, known
Boeing executive bonuses under CEO Dennis Muilenburg were linked directly to earnings per share and total sha…
Boeing executive bonuses under CEO Dennis Muilenburg were linked directly to earnings per share and total shareholder return.
Labels: Inferred, Low, known
Under the 787 manufacturing model, Boeing and Boeing Fabrication directly manufactured only about 35% of the…
Under the 787 manufacturing model, Boeing and Boeing Fabrication directly manufactured only about 35% of the aircraft, restricting Boeing's role largely to final assembly, integration, and testing.
Labels: Source-linked, Low, known
In some years during the decade preceding the MAX crisis, Boeing distributed over 100% of its free cash flow…
In some years during the decade preceding the MAX crisis, Boeing distributed over 100% of its free cash flow to shareholders via buybacks and dividends.
Labels: Inferred, Low, known
A 2016 internal Boeing assessment identified potential catastrophic outcomes from uncommanded MCAS activation…
A 2016 internal Boeing assessment identified potential catastrophic outcomes from uncommanded MCAS activation, yet the system was implemented relying on a single angle-of-attack sensor input.
Labels: Inferred, High, known
In 2001, Boeing technical fellow L.J.
In 2001, Boeing technical fellow L.J. Hart-Smith presented an internal paper warning that aggressive outsourcing could transfer technical competence and profits to suppliers while leaving Boeing responsible for integration and rescue costs.
Labels: Source-linked, Low, known
When the merged company began operations on August 4, 1997, legacy-Boeing CEO Phil Condit became chairman and…
When the merged company began operations on August 4, 1997, legacy-Boeing CEO Phil Condit became chairman and CEO, while McDonnell Douglas CEO Harry Stonecipher became Boeing president and COO.
Labels: Source-linked, Low, known
Boeing committed to re-engining the 737 into the MAX in 2011 after American Airlines signaled an intent to pl…
Boeing committed to re-engining the 737 into the MAX in 2011 after American Airlines signaled an intent to place a major order for the competing Airbus A320neo.
Labels: Inferred, Low, known
In 2006, CEO James McNerney received total reported compensation of $19.4 million, including $8.7 million in…
In 2006, CEO James McNerney received total reported compensation of $19.4 million, including $8.7 million in stock awards, $1.7 million in options, and $4.025 million in non-equity incentives, compared to a base salary of $1.75 million.
Labels: Inferred, Low, known
In 1998, following the McDonnell Douglas merger, Boeing authorized the repurchase of 15% of its outstanding s…
In 1998, following the McDonnell Douglas merger, Boeing authorized the repurchase of 15% of its outstanding stock (145.9 million shares), completing the program in December 2000.
Labels: Source-linked, Low, known
Upon entering the combined Boeing following the merger, Harry Stonecipher held 477,415 Boeing stock equivalen…
Upon entering the combined Boeing following the merger, Harry Stonecipher held 477,415 Boeing stock equivalents, 78,000 restricted shares, and options on 1.17 million Boeing shares.
Labels: Source-linked, Low, known
Dennis Muilenburg earned roughly $80 million to $100 million in total compensation while CEO and departed in…
Dennis Muilenburg earned roughly $80 million to $100 million in total compensation while CEO and departed in December 2019 with over $60 million in stock and pension benefits.
Labels: Inferred, Medium, known
Jim McNerney received over $200 million in total compensation, including deferred payouts and pension, over h…
Jim McNerney received over $200 million in total compensation, including deferred payouts and pension, over his tenure as Boeing CEO.
Labels: Inferred, Low, known
For 2011, Boeing CEO James McNerney had a base salary of $1.93 million, a target long-term incentive of $11.4…
For 2011, Boeing CEO James McNerney had a base salary of $1.93 million, a target long-term incentive of $11.4 million, an annual incentive payout of $4.439 million, and a performance award of $4.265 million.
Labels: Source-linked, Low, known
Boeing sold the AOA disagree alert and optional AOA indicator as optional add-ons, leaving both Lion Air Flig…
Boeing sold the AOA disagree alert and optional AOA indicator as optional add-ons, leaving both Lion Air Flight 610 and Ethiopian Airlines Flight 302 without alerts for conflicting sensor readings.
Labels: Inferred, Medium, known
On December 17, 2018, less than two months after the Lion Air Flight 610 crash, Boeing approved a new $20 bil…
On December 17, 2018, less than two months after the Lion Air Flight 610 crash, Boeing approved a new $20 billion share repurchase authorization and announced buybacks would resume in January 2019.
Labels: Source-linked, Medium, known
By Boeing's 2001 proxy statement, Harry Stonecipher held approximately 2.19 million Boeing shares and share i…
By Boeing's 2001 proxy statement, Harry Stonecipher held approximately 2.19 million Boeing shares and share interests.
Labels: Source-linked, Low, known