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Tuesday, December 02, 2003 - Page updated at 12:45 A.M.
Boeing chairman, CEO Phil Condit resigns
By Times staff and wire services
Harry Stonecipher, the former McDonnell Douglas chairman who, with Condit, engineered Boeing's merger with McDonnell Douglas eight years ago, will be president and CEO effective immediately.
Former Hewlett-Packard Co. president and chief executive Lew Platt will serve as non-executive chairman of Boeing's board.
The company issued a statement saying its board accepted Condit's resignation after deciding "a new structure for the leadership of the company is needed.''
Boeing stock closed down 37 cents to $38.02 today as the Dow Jones industrial average jumped 116.59 points to 9,899.05, an 18-month high.
Condit's exit comes one week after Boeing announced it had fired its chief financial officer, Mike Sears for ethical improprieties, saying he discussed job prospects with a top Air Force official while she was still negotiating with Boeing over a multibillion-dollar contract for tanker planes. The official, Darlene Druyan, who went to work for Boeing last year, also was fired.
The Pentagon's Office of the Inspector General is also investigating Druyan's departure and the tanker acquisition process.
Boeing made no connection between Condit's departure and the firings in its Monday announcement.
Condit, in an interview this morning with KIRO radio, acknowledged the "events of the last few weeks" had played a role in his departure. He also said he was looking forward to spending more time in Seattle, from where Condit led Boeing's corporate headquarters to Chicago in 2001.
A statement from Stonecipher suggested there would be no reversal of Boeing's decadelong effort to diversify out of commercial airplanes into defense, space and technology ventures.
"We have the right strategy," Stonecipher added. "The task before us is to execute. ... Boeing is a great company with tremendous capabilities to define the future in each of our markets and deliver consistent, profitable growth."
Platt praised Condit's "characteristic dignity and selflessness in recognizing that his resignation was for the good of the company'' and said the board "is in unanimous agreement that the company has been pursuing the right transformation strategy and that Boeing is in excellent financial condition."
The company has laid off more than 40,000 employees the last two years, about half of them in Puget Sound.
This year Boeing has surpassed two major milestones, both reflecting the dramatic decline of its once-dominant commercial airplanes business.
For the first time ever, Boeing's military and space work took in more money than commercial airplanes. And for the first time since the dawn of the jet age, Boeing is expected to finish the year as the world's No. 2 commercial airplane manufacturer, having been surpassed by Toulouse, France-based Airbus.
Pay at the top
In deciding to resign as head of Boeing, Condit gave up a salary that last year paid him more than $3.8 million, plus other stock and tax benefits. Resignation won't mean hardship. After a career at the company, and seven years as chief executive, he is eligible for a pension that will pay him nearly as much: $3.1 million a year.
The information, outlined in Boeing's regulatory filings for 2002, shows that Condit made $1.5 million in salary last year, plus a bonus of $982,800 and $169,879 in other annual income. He also received stock valued at $903,405, though it carries restrictions, and another $274,463 in other compensation.
If he is paid anything like Condit, Harry Stonecipher will receive a large boost in salary. He made nearly $2.1 million last year, so earning Condit's salary would mean an 81 percent pay raise. The promotion also could mean a sizable boost to Stonecipher's retirement pay. His retirement in June 2002 provided him with an annual pension of $631,000.
Condit and Stonecipher also both have substantial stakes in the company. At the end of last year, according to company filings, Condit owned 829,195 shares worth about $31.5 million, according to the Boeing stock price in late trading today. Stonecipher owned 1.742 million shares worth about $66.2 million. It wasn't clear how much of the stock was still subject to vesting or other restrictions, but in both cases, more than half of the shares appeared to be fully owned by the executives.
Boeing currently doesn't have severance agreements for departing executives. But even if it did, it doesn't appear that such a golden parachute would apply in Condit's case. According to the company, he offered his resignation to the board, which accepted it. That would suggest a retirement package rather than severance.
Seattle Times business reporter Alwyn Scott contributed to this story.
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