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Article updated: 3/15/2013 5:36 PM

Boeing CEO got 20% pay hike before 787's grounding

Boeing Commercial Airplanes President and CEO Ray Conner rubs his eye Friday during a news conference in Tokyo.

Boeing Commercial Airplanes President and CEO Ray Conner rubs his eye Friday during a news conference in Tokyo.

 

Associated Press

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By Bloomberg News

Boeing Co. Chief Executive Officer Jim McNerney's compensation climbed 20 percent to $27.5 million last year, before the planemaker's marquee 787 Dreamliner was grounded by overheating batteries.

McNerney, 63, received $10.8 million of incentive pay in addition to his $1.93 million salary and $840,775 in other compensation, Chicago-based Boeing said today in proxy materials filed with the Securities and Exchange Commission. He earned $23 million in 2011.

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The 787 Dreamliner, whose completion was among McNerney's signature achievements, has been grounded since Jan. 16 as Boeing and regulators led by the U.S. Federal Aviation Administration probe the battery malfunctions.

Boeing climbed 2.1 percent today to $86.43, the highest close since May 2008, after executives said safety upgrades may allow commercial 787 flights to restart within weeks. The plane entered service in 2011 after three years of delays amid supply chain disruptions, assembly problems and a Machinists' strike.

With deliveries of the 787 under way, Boeing overtook Airbus SAS as the world's largest planemaker last year for the first time since 2002, shipping 601 aircraft to customers versus 516 for its Toulouse, France-based rival. Still, the jetmaker's stock advanced just 2.7 percent, lagging behind a 13 percent increase on the Standard & Poor's 500 Index.

Incentive Pay

McNerney's incentive pay for the period, in which Boeing said it exceeded both 2012 and three-year profit targets, included a $4.44 million annual bonus and $6.38 million from a long-term program.

The value of his pension increased $6.37 million, according to the filing, and he received $7.53 million in stock and option awards.

McNerney's realized compensation, or income reported to the U.S. Internal Revenue Service for the period, was $20.1 million, compared with $12.4 million a year earlier.

Jim Albaugh, who served as head of Boeing's commercial airplanes division until his retirement last year, earned $9.63 million in 2012, versus $8.49 million in 2011, according to the filing.

Albaugh will receive $708,543 annually from Boeing's supplemental executive retirement plan, according to the filing.

The planemaker said Albaugh also was due to receive service-based equity and performance awards that had a value of $5.54 million as of Dec. 31. Under Internal Revenue Service rules, the final value of that package can't be calculated until after April 1, six months following his retirement, Boeing said.

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