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CEO Sacrifices: Is Boeing’s CEO Going?

Boeing CEO Dennis Muilenberg is receiving wilting criticism in the Senate and in the media for his company’s development of the 737 Max and the way it handled the aftermath of two crashes that killed 346 passengers, his tenure running the company in question after the board stripped him of his chairmanship while commercial aviation chief Kevin McAllister was fired.

He’s hardly alone. The headlines are filled with sudden CEO successions lately. WeWork forced out their charismatic but misleading founder Adam Neumann after paying him an obscene $1.7 billion ransom to leave. Overstock’s founder Patrick Byrne and Papa John’s founder John Schnatter each resigned in scandal earlier this year. According to the outplacement firm Challenger, Gray & Christmas, a record 1,160 U.S. corporations announced this year that their CEOs were leaving office over the last 12 months. They departed for all kinds of reasons: retirement, planned succession, some from sheer exhaustion, some through appropriate accountability for performance slumps or personal conduct failures.

And some were vilified as scapegoats for problems elsewhere.

Earlier this year, Wells Fargo’s CEO Tim Sloan—a humble, heroic executive doing his best to fix the bank after it was nearly destroyed by scandal —was pummeled by both the left and right, with Senator Elizabeth Warren, Congressman Katie Porter, Congressman Patrick McHenry and White House chief of Staff Mick Mulvaney piling on when the culpability should have been directed toward fired CEO John Stumpf. No matter. Sloan, a symbol of past leadership, became a convenient whipping boy. He left office soon afterwards despite soaring performance and success over his 2.5 years in office—and the great respect of his constituents.

Now it’s Muilenberg’s turn. To be sure, he has to take the heat from Senators— some of it properly targeting Boeing missteps, some of it the usual bipartisan political grandstanding. “Have there been discussions it is time for you to transition out of the CEO job?” CNBC’s Phil Lebeau asked Muilenberg in the halls seconds before his Senate hearing started, anticipating the questions to come.

“On this day our deepest sympathies go with the families of Lion Air,” Muilenberg replied. “We are humbled. It has only amplified our focus on safety. Going to do everything we can to ensure this never happens again. I am focused on the job at hand. We understand those criticisms and those views but my job is to provide safe travel.”

There is a contrary old adage about Machiavellian sea captains that “The captain announces shore leave to the crew but it is the first mate who has to cancel shore leave.” When things go wrong, we look to the CEO to explain mishaps and to be accountable. So often we’ve seen tragic situations such as at BP, Toyota and Carnival Cruise lines, where lieutenants were thrown under the bus. At Boeing, problems in the commercial aviation division were laid at the feet of McAllister, not Muilenberg—at least for now.

That’s fair. Muilenberg seems to have engaged in no deceit or misconduct. Boeing informed the Department of Justice about some ambiguous text messages from a former test pilot that the Justice Department did not want referred to the FAA due to a criminal investigation, but no true wrong doing has surfaced. With their reliance on 900 vendors as well as the maintenance systems of the air carriers who use their planes, faulty external sensors on two planes were not repaired, a redundancy in those sensors was not considered, the alert over inconsistent sensors was inadvertently missing from many instrument panels, the MCAS auto pilot system was not as easily turned disengaged by newer less experienced pilots, as well as an apparent lack of transparency and training for all pilots to understand the MCAS system would continually revert to force the nose down.

There are, of course, problems that need addressing. A review of the culture is in order to fortify Boeing’s historic focus on safety, as well as new software fixes, new training procedures, new centralized safety processes and a new board committee overseeing safety. But, as Jim Cramer of CNBC commented, “Dennis Muilenberg is showing remarkable contrition, not combative but outlining what they’ve learned to do better.”

Muilenberg’s and Boeing’s mission now is to rebuild trust and clear certification for the 737 Max to return the air, drawing on its 100-year safety record, current contrition, and new improvements. The stock market seems to support Muilenberg. Mary Barra of GM succeeded at this mission leading their recovery from their ignition safety crisis.

The question here—as it is whenever there’s a crisis in a company—seems simple enough: Are we better off with him or without him? But as we all know, things are seldom simple.

If Muilenberg can accomplish his mission, it would be wrong for the board to wilt. But that doesn’t mean—no matter the facts or how well he handles the situation—that they won’t. After all, CEOs make for good sacrifices. Like it or not, that’s part of the job.


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