Boeing Seeks Closer Tie of Exec Pay, Stock Price

Boeing Co. plans to overhaul management pay, tying it more closely to stock price, to hold top executives more accountable for the aerospace company’s financial performance.

The Seattle-based company also said it expects to produce 42 planes a month in the second quarter and is on track to meet its goal of 43 a month in the third quarter, said Ron Woodard, president of the commercial airplane group. That’s up from its 40-a-month production rate now.

The world’s largest aircraft maker is struggling to return to profitability after losing $178 million last year on costly production problems and the consolidation of McDonnell Douglas Corp. The compensation overhaul helped push Boeing shares up 94 cents to close at $51.25 Wednesday on the New York Stock Exchange.

“It aligns management’s interests with those of shareholders,” said Peter Aseritis, an analyst with Credit Suisse First Boston.

Under proposals covering as many as 2,000 of its top managers, a new stock option that vests in relation to stock performance targets would replace the standard stock options now granted, said Chairman and Chief Executive Phil Condit. For example, Boeing’s price must rise by at least a compounded 10% over five years for the first 25% of the options to vest.

Another proposal would increase the amount of stock that managers must own relative to their base salary, depending on executive level. Condit, for example, must double the amount of stock he owns to six times his base salary. A third proposal would award a type of stock that is restricted until retirement, Condit said.

Separately, Boeing said Fort Worth-based Bell Helicopter Textron, which works with Boeing on its tilt-rotor aircraft, will buy Boeing’s single-engine commercial helicopter business for undisclosed terms. No firm deadline for completing the sale was given, but Boeing said it expects the transfer of the production line to be completed in a matter of months.

Boeing’s production stumbled late last year, hampered by shortages of parts and workers, as it tried to double production within 18 months to handle a record number of orders for jets.

Boeing plans to step up production of the 747 jumbo jet to five planes a month in July, Woodard said. Previously the increase was planned for the second quarter.