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Lawsuit Settlement to Force Major Changes Within Boeing

FILE - In this Jan. 25, 2011 file photo is the Boeing Company logo on the property in El Segundo, Calif.

A settlement between Boeing shareholders and certain members of the board of directors will have a significant impact on how the company runs in the future.
The Boeing Company is settling another lawsuit over the Boeing 737 MAX, with implications that could change how the aerospace giant does business in the future.


Reuters reports the company will settle with shareholders for $237.5 million, along with certain governance provisions to prevent another similar crisis in the future.


Settlement Sets Rules for Board of Directors, Creates Independent Chairperson

The settlement comes after a Delaware judge ruled that the faulty Maneuvering Characteristics Augmentation System (MCAS) developed for the 737 MAX could be considered a “red flag” which should have been questioned by the board of directors. Plaintiffs in the suit – led by New York State comptroller Thomas P. DiNapoli and the Fire and Police Association of Colorado – accuse the board of “failing their fiduciary responsibility to monitor safety and protect the company” because of the chain of problems associated with MCAS.


Under the proposed agreement filed Friday, November 12, 2021, Boeing will be required to have at least three directors on their board with aviation safety-related experience. In addition, the company will have to create a new board position, to be filled within one year by a person with either aviation or aerospace engineering experience or product safety oversight knowledge.


The company would also be forced to split the roles of chief executive officer and chairperson of the board. Currently, former Boeing chairman David Calhoun serves solely as president and CEO, replacing Dennis Muilenburg, who oversaw the company during the 737 MAX crisis.


Boeing would also be required to create an ombudsman program, which would serve within the company for no less than five years. The ombudsman team would allow employees working in Federal Aviation Administration certification to raise concerns without the fear of retaliation.


If the settlement is accepted by the court, the shareholders will be paid out by Boeing’s insurers. The company would only be responsible for $29.7 million for legal fees and attorney expenses. A decision is still pending.

Proposed Settlement Would Bring Boeing Fines to Under $3 Billion in 2021

Should the proposal go through, it would bring Boeing’s total payouts to around $2.75 billion across all of 2021. The Chicago-based company agreed to a settlement with the Justice Department exceeding $2.5 billion in January, followed by a $6.6 million deferred penalty to the FAA in February.

SamirD November 19, 2021

I don't think any of this will matter as it gives Airbus a window of opportunity to come back and knock out Boeing once and for all as they struggle financially.  This should be a case study in future years on why you shouldn't farm out to 'cheap labor' your core business or be prepared to go out of business.