Originally Posted by
LowObservable
Not just the C-suite. If you're eligible for a bonus, the size of the total bonus pot is linked to financial performance and some of your bonus may well be in deferred stock, so the cheap and fast mentality can be stamped on most of management. And while stock price is an indicator of a company's perceived performance and value, focusing solely on stock price, and boosting it with dividends and buybacks, can end up like "teaching to the test". IMHO the tanker mess was another example of an emphasis on cheap and fast.
A major fall in Boeing stock in 2020 - and we can't rule out that happening - will not only act as a drag on the Dow, but will be a pitch-perfect parable of Bad Capitalism for Warren or whoever in November.
The continuing production of 737s, with no apparent delivery date on the horizon, is a further example. These are being put into Boeing's accounts as assets at the complete once-anticipated sale value of each aircraft, buoying up the stock price by not showing the real picture. Goodness knows where they have borrowed the cash from to pay for this without sales being completed. I agree that one day Wall Street is going to wake up to this, though they haven't done yet.
Muilenberg's joint Chairman and CEO position at Boeing (strange for such a huge company) has been ended, but in him relinquishing the Chairman and keeping the CEO positions I think they have got it the wrong way round. To explain, these are typically "look up/look down" positions. A Chairman looks up, to the owners/stockholders of the company, makes corporate statements, etc. A CEO looks down in the structure, through the other executive directors and managers, and runs the company's operation. Muilenberg has spent the last year it seems concentrating on innumerable Wall Street presentations and statements, interviews with stock analysts, and such like, which seems his skill, while the real problem they had was down within the operation of the company.
Wall Street is generally intolerant of financial predictions that don't come good, where forecasts for the year are not made. Now Boeing's forecasts of when they will have the 737 issue fixed have gone through so many iterations this year, each time being pushed back and pushed back. Has anyone counted how many times they have stated an anticipated re-entry date that has not been made? If they can't have any accuracy in working out when things will restart, be properly fixed, compliant with the regulators, etc, then how can their financial forecasting that depends on this, and the management team leading it, be any good.