NLPC is a critic of the ethical climate fostered by Boeing’s management. In 2003, NLPC exposed the Boeing tanker deal scandal, sending two Boeing executives to prison, and saving taxpayers at least $4-5 billion. In 2005, the Army announced that it would renegotiate Boeing’s contract for Future Combat Systems after NLPC Chairman Ken Boehm testified before a Senate committee that the contract exempted Boeing from virtually all statutes dealing with waste, fraud and abuse.
NLPC has also protested Boeing’s financial support for Jesse Jackson’s groups and its sponsorship of an 2006 event featuring Nation of Islam Leader Louis Farrakhan.
The resolution reads:
RESOLVED: that the shareholders of Boeing (“the Company”) urge the Board of Directors to seek shareholder approval of future severance agreements with senior executives that provide benefits in an amount exceeding 200% of the sum of the executives’ base salary plus bonus.
“Severance agreements” include any agreements or arrangements that provide for payments or awards in connection with a senior executive’s severance from the Company, including employment agreements; retirement agreements; settlement agreements; change in control agreements; and agreements renewing, modifying or extending such agreements.
“Benefits” include lump-sum cash payments (including payments in lieu of medical and other benefits); the payment of any “gross-up” tax liability; the estimated present value of periodic retirement payments; any stock or option awards that are awarded under any severance agreement; any prior stock or option awards as to which the executive’s access is accelerated under the severance agreement; fringe benefits; and consulting fees (including reimbursable expenses) to be paid to the executive.
Because it is not always practical to obtain prior shareholder approval, the Company would have the option, if this proposal were implemented, of seeking shareholder approval after the material terms of the agreement were agreed upon.
The supporting statement reads:
Severance agreements as described in this resolution, commonly known as “golden parachutes,” are excessive in light of the too high levels of compensation enjoyed by senior executives at the Company and U.S. corporations in general.
Excessive executive compensation creates two problems. First, public outrage undermines support for the free market, the system that makes possible corporate profits. Second, overcompensated executives are more likely to acquiesce to demands from anti-business activists, in order to insulate themselves from criticism for their high pay.
Shareholders and the public are outraged when executives walk away with tens or hundreds of millions of dollars. Such outrage is magnified when executives leave amidst failure and/or scandal.
Our two previous CEOs have exited in embarrassment. Last year, this resolution received an impressive 38% of shareholder votes. Since that time, questions about Boeing’s present leadership have only increased.