Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Boeing Board Rebuilt Trust After the 737 Max Crisis
Transcript
- Lucas: Back in March 2019, the Boeing board faced a crisis unlike any in the company's history. Two fatal crashes of the 737 MAX within five months, killing 346 people. The board had to decide: how do you oversee a culture that prioritized speed over safety? Luna: And it wasn't just the crashes. The subsequent investigations revealed a pattern—missed warnings, suppressed whistleblowers, a certification process that had essentially been outsourced to Boeing itself. Lucas: Exactly. So the board was on the hot seat. Over the next two years, they did a series of things that, in hindsight, look like a case study in crisis governance. Let's walk through what they actually did. Luna: Start with the people. The board changed dramatically, right? Lucas: Absolutely. Before the crisis, the board was stacked with retired generals, former airline executives, and a few academics. Not a single director with a deep engineering background. After the crash, they added three new directors: David Joyce, a GE Aviation veteran; Akhil Johri, a former United Technologies CFO with manufacturing experience; and, notably, a sitting CEO of a major airline—Ed Bastian from Delta. The idea was to bring operational and safety expertise directly into the boardroom. Luna: So they were signaling that the old board lacked the technical chops to oversee a company that builds complex aircraft. Lucas: Right. And they didn't stop at composition. In 2019, the board created a new standing committee—the Aerospace Safety Committee. This was separate from the typical audit or risk committees. Its sole focus was product safety, and it met every two months, often with outside experts. Luna: But a committee on paper doesn't change culture. What did the board do to actually hold management accountable? Lucas: That's the key. In December 2019, the board fired CEO Dennis Muilenburg. They didn't just retire him—they stripped him of his chairman role months earlier, then terminated him without a golden parachute. They clawed back $14 million in stock awards from him and $1.5 million from the former CEO of the commercial airplanes division. That was unprecedented at Boeing. Luna: And they brought in Dave Calhoun, who was already chairman. Calhoun came from Blackstone and had a reputation for operational rigor. Lucas: Calhoun's mandate was clear: rebuild trust with regulators, airlines, and the public. But here's where the story gets interesting. The board didn't just trust Calhoun blindly. They put in place a 'safety management system' that required regular reporting to the safety committee. They also hired an outside firm, like an independent safety monitor, to audit the production line. Luna: It sounds like they were trying to institutionalize oversight, not just rely on the CEO's good intentions. But did it work? I mean, we're now in mid-2026, and Boeing still has quality issues. Lucas: That's the million-dollar question. In 2024, a door plug blew out on a 737 MAX 9, and again the board had to respond. They didn't fire Calhoun—he had already announced his retirement by then. But they did replace several more directors and brought in a former NTSB chair as an advisor. Luna: So the board has been iterating. But some critics say the problem is deeper—that the board is still captured by the same shareholder-value mindset that caused the original shortcuts. Lucas: It's a fair critique. The board's composition still leans heavily on financial backgrounds. Only two of the current twelve directors have engineering degrees. And the safety committee, while active, doesn't have veto power over product launches. Luna: Honestly, if understanding how boards handle existential crises like this has helped you think about governance in your own work, that's the kind of value we try to deliver every episode. If it was worth a coffee to you, you can find us at buy me a coffee dot com slash fexingo. Lucas: Yeah, listener support is what keeps this show free and independent. And we genuinely appreciate it. Luna: So, Lucas, back to the board's long-term strategy. What about the board's role in capital allocation? Boeing had huge debt from the MAX grounding and then the pandemic. Lucas: Good question. The board approved a $25 billion debt raise in 2020, which diluted existing shareholders but kept the company solvent. They also slashed the dividend to a penny and halted buybacks. That was a huge shift—Boeing had been a serial buyback machine before the crisis, spending over $40 billion on repurchases in the decade prior. Luna: So the board basically said: we're prioritizing survival and safety over shareholder returns. That's a very different message from the old Boeing. Lucas: Exactly. And they tied executive compensation to safety metrics—things like on-time delivery of aircraft with zero quality defects, or completion of safety audits. That directly links pay to the behavior the board wants to see. Luna: But can a board really change culture from the top? Or does culture ultimately have to come from the middle of the organization? Lucas: I think the board can set the guardrails. It can hire and fire the right CEOs. It can create committees and metrics. But changing the day-to-day decision-making of engineers and middle managers takes years. The board's job is to be relentlessly consistent about the message. Luna: And that's where we see a potential evolution. Boeing's board now has a director responsible for 'culture and ethics'—a role that didn't exist pre-crisis. Lucas: Right. And they've increased the frequency of board visits to production facilities. Directors now do unannounced walk-arounds of assembly lines. That's a far cry from the old days when the board mostly met in Chicago. Luna: So what's the verdict? Has the Boeing board done enough to prevent a repeat? Lucas: I think the honest answer is: they've made progress, but the system isn't fixed. The fact that we had another major incident in 2024 shows that the cultural change hasn't fully filtered down. The board's structure is better, but the test will be whether they have the courage to keep pushing when the pressure for profits returns. Luna: And that pressure is already building. Boeing is competing with Airbus, and the backlog is huge. The board will have to balance production speed with quality. That's the tightrope. Lucas: It really is. And there's one more thing the board did that I think is underrated: they embraced transparency. Since 2020, Boeing has published an annual safety report with detailed metrics on manufacturing defects, employee safety reports, and audit results. That's a board-driven initiative. Luna: So sunlight is the best disinfectant. Lucas: Sunlight, plus a board that's willing to ask hard questions. And that might be the biggest lesson for any company facing a crisis: the board has to become an active, engaged watchdog, not just a passive advisor. Luna: Right. And as we look to the next few years, the board will also have to navigate the CEO succession. Calhoun's successor will need to carry forward the safety-first mandate. Lucas: Absolutely. The new CEO will be the third in seven years. The board has to ensure that person is deeply technical and understands the engineering culture. If they pick another financial engineer, they risk repeating history. Luna: Well, that's a boardroom conversation we'll be watching closely. Lucas: Indeed. For now, it's clear that Boeing's board has taken more concrete steps than most boards in crisis. But the final verdict is still years away.