Boeing Holders Reject Top-Job Split in SEC-Ordered VoteThomas Black
Boeing Co. investors opted against splitting the roles of chairman and chief executive officer in a vote that the U.S. Securities and Exchange Commission forced the planemaker to allow.
About 59 percent of holders voted to reject the proposal at today’s annual meeting, said John Dern, a spokesman who cited a preliminary tally. Both roles have been held by Jim McNerney, 63, since he joined the company in July 2005, and the investor who proposed dividing them cited a three-year delay on the new Dreamliner, and its later grounding, among his reasons.
Requiring an independent chairman is the most popular proposal for U.S. investor meetings this year, with 53 so far, and the total may break the record of 56 in 2012, Institutional Shareholder Services data show. It’s gaining traction as boards take on a larger monitoring role, said Charles Elson, director of the University of Delaware’s corporate-governance center.
“The board is there to monitor management,” Elson said in a telephone interview. “Why should the person who chairs the monitoring institution also be the person being monitored? It makes no sense.”
In 2012, four such proposals won a majority, and the total of almost five dozen garnered 35 percent support on average. The 11 so far in 2013, none of which were approved, had an average backing of 28 percent, ISS said. The Boeing proposal was supported by 41 percent of shareholders, according to the preliminary tally, Dern said.
On the S&P 500 Index, 207 companies, or 43 percent, have divided the roles of chairman and CEO. That’s up from 35 percent in 2007, according to a 2012 board index report by Spencer Stuart, a New York-based consulting firm.
The proposals are difficult to win because shareholders often back the status quo, especially when a company is doing well, Elson said.
While Boeing faced increased scrutiny after the temporary grounding of its marquee 787 Dreamliner in January, the Chicago-based company overtook rival Airbus SA in commercial plane deliveries last year for the first time since 2002.
Boeing fell 1 percent to $91.90 at the close in New York. The shares have gained 22 percent this year, outperforming a 12 percent increase for the Standard & Poor’s 500 Index.
“The more a company has a performance issue, the more likely these things will get support,” Elson said. “Theoretically, they should get a lot of support. They make sense.”
Ray Chevedden, the shareholder who helped submit the Boeing proposal, said it would strengthen oversight and reiterated his concerns in a letter to the SEC the day that the 787 grounding began. Boeing has since won regulatory approval for the planes to return to flight, and airlines have begun tests.
Boeing said its board has a lead director, Ken Duberstein, with “extensive and clearly delineated responsibilities” to provide the board with independent leadership. Those include presiding at executive sessions of independent directors in which McNerney is not present, the company said.
Before McNerney was hired, Boeing’s chairman was an independent director and the company may choose to return to that structure in the future, Boeing said in a proxy filing.
“Implementing this proposal would impose a one-size-fits-all solution on Boeing that ignores the board’s judgment and responsibilities in this area for no discernible benefit,” Boeing said.