How To Fix Boeing
Boeing (ticker BA) is an easy fix. It goes without saying that CEO Dave Calhoun and Boeing’s Board ought to be fired. However, the way to fix Boeing is to change the executive compensation plan as well as the compensation plan for all employees. Specifically, variable compensation needs to be directly linked to aircraft quality and safety. Compensation plans are the most effective tool for changing culture.
I have been around markets long enough to know that BA shares would trade higher if Boeing eliminated the headline risk around aircraft safety. Whatever hit EBITDA would take in the short-term associated with extra expense to ensure superior aircraft quality would be more than offset by a higher share price as headline risk goes away. Further, if Boeing could demonstrate superior aircraft quality over the long-term, it is likely that customers would increase order volume, and therefore revenue to Boeing.
Our recent Boeing articles: