As Striking Machinists Vote, Stock Prices Trigger Bonuses for Bosses
SEATTLE (AP) _ Five top executives of Boeing Co. became eligible for millions of dollars in stock bonuses as thousands of striking Machinists voted on a contract offer that would have made workers pay more for medical benefits.
The bonuses were triggered Tuesday because the company’s stock price exceeded a $70 per share average for 20 consecutive days. The stock closed up 12 1/2 cents at $73.37 1/2 per share on the New York Stock Exchange _ well above the $71.75 required to trigger the options.
From a public-relations standpoint, ``The timing couldn’t be worse,″ said aerospace industry analyst Bill Whitlow at Pacific Crest Securities.
The bonuses were cited by a number of Machinist union members as they ignored recommendations by union leaders Tuesday and rejected Boeing’s latest contract offer, continuing a seven-week strike. More than 32,000 workers walked out Oct. 6.
Many Machinist union members believe thousands of Boeing workers have been laid off to increase the value of Boeing’s stock. Boeing posted profits of $856 million last year, and workers felt those profits should be shared with them.
``It would be hard to find a better illustration of what’s wrong with American management than (Boeing Chairman Frank Shrontz) pocketing that huge bonus the same day that his employees are being asked to swallow takeaways,″ said union spokesman Matt Bates.
Shrontz; Boeing president Phil Condit; Ron Woodard, president of Boeing Commercial Airplane Group; Jerry King, president of Boeing Defense & Space Group; and Boyd Givan, chief financial officer and senior vice president, all were eligible for the bonuses.
The bonuses were offered to Boeing leaders in 1993 as an incentive to boost the company’s stock, then selling at about $40 a share.
Boeing executives are paid less than their counterparts at similar corporations, so the bonuses were not considered excessive when they were approved.
``Since the time the options were awarded and the stock has appreciated, all Boeing shareholders, including employees, have gained value,″ company spokesman Paul Binder said.
Under the 1993 bonus plan, Shrontz was offered options on 200,000 shares and Condit 125,000 shares at $40.56 per share _ the price of the stock at that time. Woodard, King and Givan were each offered 45,000 shares at $47.25.
The bonus was triggered at 50 percent of total shares each when the stock reached $64, which it did in July; at 25 percent when the value reached $67, which it did in September; and 25 percent when the stock value averaged $70 per share for 20 consecutive days.
As a result Shrontz was eligible to buy 50,000 more Boeing shares at $40.56 per share Tuesday for a gain of $1.64 million if he were to sell them for $73.37 1/2. Condit would realize a gain of more than $1 million for his 31,250 additional shares. The others would make more than $293,000 each on their 11,250 shares.
At Tuesday’s price, Shrontz’ full bonus _ on 200,000 shares _ would be worth $6.6 million, Condit’s $4.1 million, and those of the other three executives about $1 million each.