As Boeing scrambles to conserve cash in the dramatic aviation downturn, CEO Dave Calhoun told nonunion employees Wednesday the company has this month given them shares of company stock instead of pay raises.
Boeing said it awarded the stock Monday to about 82,000 employees, excluding executives and those engineers, machinists and others whose pay is determined by union contracts.
The stock will vest in three years, on Dec. 14, 2023, provided the employee doesn't leave the company through that date.
However, according to an internal company memo, if an employee is laid off or accepts a voluntary buyout in that period, they will keep a proportion of the allocated shares: one-third if leaving in the first year, two-thirds in the second year and all of the shares in the third year.
The amount of shares granted depends on the employment level. According to the internal memo, managers will get 100 shares, which today are valued at about $226 each.
Senior nonmanagerial employees get 75 shares, worth almost $17,000 today; lower level salaried employees 50 shares, worth just over $11,000; and non-union hourly employees 25 shares, worth about $5,600.
Calhoun presented the move, the first in Boeing's recent history, as reflecting "our confidence in our shared future." Pointing to the hope that the value of the shares could rise when the business recovers, he said the stock award "has the potential to deliver value significantly beyond a traditional annual merit increase."
Still, the clear motivation is to help stanch the cash bleed. In the third quarter of this year, Boeing's financial filings show that the cash outflow was just over $55 million per day.
In October, Boeing announced that it would use stock rather than cash to fund the company contribution to employees' 401(k) plans for the foreseeable future, which it said would preserve about $1 billion of cash.
It will also use stock to make a discretionary contribution to the company pension plan this quarter, saving another $3 billion in cash.
These moves are in addition to slashing 31,000 jobs companywide this year and seeking to sell buildings suddenly considered surplus, including the local headquarters of Boeing Commercial Airplanes at Longacres.
Aside from merit pay raises, Boeing employees have typically earned hefty annual incentive bonuses paid out in February — until 2020.
Because of the hit to the business from the prolonged grounding of the 737 MAX in 2019, Boeing gave no bonuses last February to its management, executives and unionized engineers and white-collar workers.
The Machinists, who have a separate incentive plan based on measures of quality, productivity and safety, did receive a bonus in February of 2.2% of their annual pay based on 2019 performance. That was down from the 2018 bonus of 5.8%.
With the MAX grounding lasting though most of this year and just a few deliveries of the airplane finally starting this month — added to the devastating hit from COVID-19 and the separate manufacturing quality issues that have halted deliveries of the 787 — the chances of Boeing incentive bonuses for 2020 look slim to none.
"We're still determining what bonuses will be paid for this year, if any," said Boeing spokesperson Bradley Akubuiro.
