In February 2020, Professor Nitzan Shilon published an Op-Ed in Agenda, a Financial Times’ boardroom resource. The article is entitled “The Pay Incentives That Failed Boeing’s CEO”. In his article, professor Shilon analyzes the pay incentives that the directors provided for Boeing’s CEO and how that may have contributed to the 737 Max crisis.
According to the piece, Boeing’s board members tried to restore confidence amid the 737 Max crisis by firing the chief executive Dennis Muilenburg. However, “they missed one big contributor to their crisis: the pay incentives they provided to the CEO they fired”. Professor Shilon argues that “the change Boeing directors made in 2017 to Muilenburg’s pay arrangement motivated him to cut corners, overlook safety concerns, and boost the immediate bottom line at all costs”.
Professor Shilon also analyzes how that decision damaged Boeing’s business concluding that “for Boeing, these incentives contributed to airplane accidents. For the U.S. economy, they can lead to a systemic crash”.
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