Boeing bonuses pump $485 million into state’s economy

By Dominic Gates / The Seattle Times

Boeing on Thursday will pay out the final and largest round of this year’s annual bonuses, injecting a total of $485 million pre-tax into the paychecks of local employees and the Washington state economy.

More than 59,000 employees here will get an average bonus of more than $8,000 pre-tax.

Companywide, Boeing said it has awarded $1.1 billion in bonuses to about 133,000 eligible employees across the U.S. and beyond.

Almost 15,000 local unionized engineers and technical staff will receive bonuses in their paychecks Thursday, varying from 5.6% of their 2021 pay for those in the commercial airplane division to 7.1% for those in aftermarket services.

Last week, Boeing paid its 26,000 local blue-collar machinists annual bonuses of 5.8% of their total 2021 pay.

Buoyed by increased production of the 737 MAX and improvements made in factory safety and quality, that’s just under the maximum 6% payout allowed in the union contract.

Boeing’s non-union salaried staff will get similar bonuses to the unionized white-collar employees on Thursday, though with more individual variation, based upon assessments by managers of individual performance.

All those payouts, based on the company’s performance in 2021, are above the pre-set target, despite the company’s enormous $4.2 billion financial loss last year and operational setbacks that include the inability to deliver 787s because of manufacturing defects caused by robotic equipment.

Slammed successively by the grounding of the 737 MAX and then the pandemic-driven industry downturn, Boeing has adjusted its incentive plan in the past two years so that bonuses are no longer based as much on company profit as in the past — since that could have resulted in zero bonuses — but skewed more toward cash flow and operational data, including measures of quality and safety.

In a statement, Boeing’s Chief Human Resources Officer Michael D’Ambrose said, “We are proud to offer these incentives as part of a full package of benefits to attract and retain the best talent.”

Executives below the company’s top echelon of corporate officers — vice presidents, for example — will be less satisfied with their bonuses.

For the third year in a row, their annual bonuses, which are typically a very much bigger component of their total pay, will be appreciably lighter than their target bonuses.

Engineers, machinists, and execs

Average base pay for the engineers represented by the Society of Professional Engineering Employees in Aerospace, or SPEEA, is $138,000. For technical staff without engineering degrees, it is $104,000. Any overtime pay last year would also be included in calculating their bonuses.

So engineers will likely average a pre-tax bonus of nearly $8,000 and technical staff nearly $6,000.

Machinist pay varies widely depending on experience. A young mechanic with just three years at Boeing could be earning $49,000 per year in base pay without overtime, while a veteran machinist could earn twice that.

Assuming minimal overtime during last year’s downturn, the young mechanic could expect a nearly $3,000 pre-tax bonus and the veteran machinist nearly $6,000.

For executives, the cash part of their bonuses is based on similar scoring to that of other employees — though with a much higher percentage of salary awarded for meeting target.

And a substantial additional portion is a “long-term incentive award” tied to financial performance and the stock price performance over the past three years.

This year, three quarters of the elements comprising the long-term-incentive award paid out zero.

“Unfortunately, due to the company’s financial performance” over the past three years, an internal memo sent to executives explains, the performance-based cash awards and the performance-based stock awards that are part of executives’ long-term incentive plans had a “0% payout.”

Last month, the executives did receive a payout from one element of the long-term incentive plan: now-vested Boeing shares originally awarded in 2019. However, because of the plunge in the value of the stock since February of that year, those shares were worth less than half of their value at the time of the award.

As at the Wall Street investment banks, annual bonuses typically comprise a large portion of a Boeing executive’s total pay.

If pre-set company targets are met, a Boeing executive at the vice president level would expect a bonus in cash and stock equal to 50% of last year’s salary. For lower levels of executives, it would be 40% or 30%.

This year, a vice president will get a bonus of around 30% of last year’s salary.

The above does not fully apply to the top executives at the company, such as Boeing CEO Dave Calhoun and the local CEO of Boeing Commercial Airplanes Stan Deal, much of whose pay is awarded on a separate basis.

The total compensation of the top five executive officers will be revealed in the company’s proxy filing with the Securities and Exchange Commission next week.