'We're Happy He Can Afford A New Mansion... Some Of Us Live Paycheck To Paycheck': Boeing CEO Buys $4.2M Mansion Amid Wage Strikes
Posted by vinaylovestotravel@reddit | aviation | View on Reddit | 80 comments
the_whole_arsenal@reddit
I'm not advocating for either side, but some of the arguments from both are unusual at best.
https://www.seattletimes.com/business/see-how-new-boeing-chief-kelly-ortbergs-pay-compares-with-was-best-paid-ceos/
The unions seem to be pissed he is making $1.5 million. He can get an additional $3mm bonus if the airline makes production quotas, and can get a stock award of $17.5mm (that vests in 3 years). Keep in mind, Calhoun didn't get his maximum bonus the last 2 years because Boeing hasn't made production quotas, so going right to the maximum pay assumption is a bit of a stretch.
Let's assume Boeing knocks it out of the park in the next year. If you take Ortbergs $22 million total pay package and distribute it among the 117,000 employees, it's $118 per year per employee. Not exactly world changing for employees. Lastly, if you give an employee stock options/awards, it doesn't improve their current financial needs.
Should employees get a raise, sure. How much, yeah that's out of my purview.
Boeing has lost money each of the last 3 years, largely because they have failed to hit production targets, and not delivered products in time. Starliner was $1.4 billion over budget, and 3+ years late. They scrapped their NMA design in Jan 2020, and wrote off $30mm in production and development costs.
While I'm in favor of employees getting a raise, both sides should understand the financial weight, especially when the company is losing as much money that it is, and comparing a CEO's salary of $1.5 million, which is kind of low, seems so odd to me. Some seem to excel at demonizing people in these situations.
P1xelHunter78@reddit
His actual pay is irrelevant it’s the stock options. Boeing has spent 40 billion in stock buybacks since 2013. That’s nothing to sneeze at. C-suites use those buybacks to pump the stock price (increase their portfolio) and pay off shareholders. That’s a pile of money every year that could have been tilled back into the company or workers.
haasisgreat@reddit
But did the stock buyback continue after the 737max grounding? Right now it’s 2024 and not 2019 where the stocks buyback is happening
P1xelHunter78@reddit
So? That’s still a lot of money Boeing threw away during that time. Even if they had just put that cash in the bank they’d be sitting on a pile to ride out something like this. And, if they hadn’t put pumping the stock price as job #1 they wouldn’t be there in the first place. If I was in the union there I’d for sure be right there with them. Sounds like employees are fed up there, and if they see the stockholders and C-suite getting piles of money for bad decisions they at least think they should get their pound of flesh too. Even if all the employees say a quarter of all that money management threw to Wall Street it would have been life changing. Imagine if you in your job made $50,000 more over the period of several years? Where would you be financially?
haasisgreat@reddit
So does it have to do with what is happening now? The money is already thrown and they can’t request the money back from the stock buyback to pay those employees. Also they have already stop their stock buyback for 5 years. So why are you’ll dueling on the past when it has already occurred instead of focusing on how to move the company forward and ensuring it’s survival for the next few years.
frogsRfriends@reddit
I think it’s important to consider that those buybacks were funds that probably could have prevented them from getting into the situation they are in now - effects from poor decisions aren’t instantaneous
haasisgreat@reddit
But sadly the poor decision is already made years ago, instead of look forward, they’re looking back in anger which isn’t wrong but is not going to solve the financial mess today.
Tight-Employ1489@reddit
But why should employees care? Why should employees care "to grow the company" if they don't have any stake in the company? The employees are not getting any bonuses, health benifits but have to do mandetory overtime without pay. Why should the employees care weather the company is at financial ruin? That is the job of stakeholders aka executives.
If employees are going to think about company growth now why CEO, executives even get paid? Isn't the argument for CEOs getting 1000x of employees is that they take "risks" to make the company grow? The company situation is bad? Why not the executives compromise and spend millions from their own pockets to give adequate money to employees?
haasisgreat@reddit
Then they will lose their jobs when the company goes bankrupt. It’s that simple
Tight-Employ1489@reddit
Again. That is the job of executives. If the mechanics get to decide weather the company lives or die shouldn't they get more money? Or a gigantic stake on the company? So only when their are losses should machinists come together and protect the company but when there were billions and billions of profit in the last decade executives are king. You are saying the same thing I said: "Privatize the profits, socialize the losses".
If the company is in loss then it is the job of billionares stakeholders to give the money they earned in their life to keep the company afloat or resign their position of shareholder or "leader" position. When a startup fails all the hardwork of its leader goes down the drain. If boeing fails all the money of its leaders should be seized. They are leaders. Not the machinists. Machinists need to get paid for the work they do.
haasisgreat@reddit
It seems like you don’t even understand how the company is run. Boeing CEO and executive definitely do not have a billion dollars to return as they definitely do not earn in the billions. It’s seems like you don’t even understand the meaning of stocks buyback. Even if they do have a billion to return, the monthly cash burn at Boeing is rumored to be in the range a billion a month so I doubt the executive returning their money is going to keep the lights on for long.
At the end of the day they have to decide what is the raise they are looking for and what they are comfortable, you and me can only see it from a long distance. The company and the IAM can only decide for themselves what is the figure that they will agree on. At the end of the day any consequences they faced will only affect those stakeholders.
And finally for your information my stand is that I don’t really care what’s the percentage raise the IAM gets cause I’m not working at Boeing or under the union of the IAM. So I don’t have a stake in earning more money from their negotiation.
Tight-Employ1489@reddit
You are doing so much mental gymnastics that you would win in olympics by a mile.
You are speaking of life and death of company right? Then tell me if since you know so very much what are the issues Boeing are facing and how exactly giving McDonald's food worker level pay to its employees for world most advanced aerospace industry is going to solve any of its problem.
haasisgreat@reddit
No one is telling Boeing to give its employees McDonald’s wages. But it seems like you’re the person doing the mental gymnastics and trying to put words into people mouth.
the_whole_arsenal@reddit
That's a fair point, but it's not the point the workers are making. They are calling out the pay for a newly hired CEO, who has been on the job since August 8, 2024. Let's be honest, that's not long enough to get any meaningful change or ideas in place.
The workers should be calling out the board members who make those decisions for stock buy backs, or the Union should be demanding stock options for Boeing employees so they are invested in the long game too.
fridgefest@reddit
While board has to approve, it’s typically the CEO/CFO who come up with the idea and recommend stock buybacks to the board. See my other comment on this thread
Totally agree on stocks or stock options for the employees so incentives are aligned! Not sure if they want them (vs cash) as u/the_whole_arsenal made the point — it doesn’t help with their short term financial needs (especially in this tough inflationary environment)
fridgefest@reddit
Not agreeing or disagreeing with the stock buybacks (I’m not familiar with their instance). I just wanted to add that companies often do them when they believe that their shares are undervalued so they have fewer outstanding shares which means they can raise money by issuing shares when their stock price goes up again. Companies also “buy low and sell high”, in this case buying and selling their own stock.
Stock buybacks on their own shouldn’t impact the stock price, you’re reducing shares but also reducing the value of the company by the same amount because you’re reducing how much cash the company has by giving it to investors. However, they often serve as a signal to the market that the company believes stock price will go up in the future, (often temporarily) increasing the stock price. It would be bad form for executives to sell then (because they would have just made a public bet on the company’s future and need to put their money where their mouths are)
Tight-Employ1489@reddit
It is very different. The company wants employees to not ask for raise, healthcare, bonouses but work for unpaid overtimes.
What is boeing a startup? They are employees not owner of company. Why should employee work "to grow the company" if they are neither getting paid or have any stake in the company? And why are executives who are not doing anything are getting bonuses, health benifits, stocks on company for not working but intentionally trying to kill people and destroy the company? Ex-CEO got 33 mil after killing 300+ people. Leagalised murders are so great.
SavvyTraveler10@reddit
Meanwhile Boeing bought $355m back of its stock in 2023. While enjoying $9b in tax incentives over the years… it’s all mumbo jumbo dude.
the_whole_arsenal@reddit
I saw that story on tip ranks, but also saw this article saying that Boeing has not had a stock buyback since 2019, and can't because they don't have positive earnings. Their 10k for 2023 doent talk about a buyback, so im not sure how to verify that info. They suspended all dividends in 2020 and still don't have one today. https://jacobin.com/2024/01/boeing-malfunction-ceo-pay-stock-buybacks#:~:text=Lazonick%20at%20the%20University%20of,dividend%20payments%20in%20March%202020.
GTdspDude@reddit
It’s not only $1.5M it’s $1.5M + ~$5.8M guaranteed before his performance based bonus. His stock compensation is treated as income and anyone even remotely high up the corporate ladder in tech is paid in similar ratios of cash to stock based compensation. I myself make 2/3’s of my annual salary as stock.
Could he get paid more? Sure, some CEOs are even more absurdly compensated, but when the people that work for him are making less yearly due to inflation, that kind of comp package is a bad look in general. My company pays everyone well and fairly, my CEO makes more than him, but also delivers way more value. That works for us, because again we’re all paid well and fairly, which is the point of this strike.
cyberentomology@reddit
The way Seattle real estate is these days, I don’t think $4M gets you much of a “mansion”.
Maybe a slightly larger than normal suburban home, but “mansion” is a subjective term.
Pal_Smurch@reddit
Yes, but would that same home be offered to you at the same price, or was it a sweetheart deal?
cyberentomology@reddit
Most likely was purchased on the open market. Why would any seller with even the most basic understanding of supply and demand consider making such a “deal”?
Pal_Smurch@reddit
To the CEO of Boeing? I have no idea. He’s just like you and me!
cyberentomology@reddit
The sellers have no idea who the buyer is
Pal_Smurch@reddit
I certainly knew who I bought my house from.
cyberentomology@reddit
After closing, sure.
Pal_Smurch@reddit
They showed me the house.
akroses161@reddit
I just moved to Seattle a few years ago from Michigan. Our home in (3bed 2.5bath 1700sqft 1.0acre lot) Michigan we bought for $210k in 2017 and sold for $310k in 2022. Similar homes here in Seattle (depending on the neighbor) were starting at $1-1.5million for a tiny lot. And it got more expensive the closer to the city you got.
And not that was the starting price. When were buying in 2022, we would put an offer in a bit over asking and people were offering $100k over, all in cash, and waving inspections.
J3wb0cca@reddit
The misses and I watch house hunters quite a bit and it’s eye opening hearing a couple say their budget is 1.3 million and are shown a 900 sq ft home in downtown Seattle.
cyberentomology@reddit
Sounds like 4M is actually quite modest, especially for someone on a CEO salary.
bluearrowil@reddit
Seriously. $4 million here in SF gets you 3k sq ft. Mansions start north of 10.
cheetuzz@reddit
a 4000 sq ft home, 4 bed, 5 bath, on a 9000 sq ft lot is definitely not a mansion
markyyyvan@reddit
Yea 4.2 is not mansion territory these fays
Merppity@reddit
This is the Zillow page, and it's honestly not extravagant or anything. It's a nice place, but it'd also be like $450k in the Midwest - in photo 8 you can literally see the fence and a neighbor's house just right there.
And as others said, the guy's been rich for decades. The money he's buying the house with really isn't really related to Boeing.
RickMuffy@reddit
I don't think people care where the money came from, it's more that he's actively against the striking workers for the company he now runs, while those people are simply saying 'we're barely making it out here'
They didn't say take away his new home, they said we just wanna not be on the cusp of homelessness
Dedpoolpicachew@reddit
He’s not “actively against” the strikers. He practically begged them not to strike. The dude’s been on the job like 6 weeks. The negotiation stated 6 MONTHS ago. He’s been handed a really bad deal, but he knew that going in. He’s got to clean up the mess left by 25 years of executive leadership that despised the employees and treated them like garbage. He’s got to rebuild a culture to produce quality products again that’s been hollowed out by those aforementioned executives who, collectively, walked away with billions of dollars for wrecking the company. Now he’s got people doxing him, for what? Buying a house that’s pretty meh in Seattle. It might seem like a huge house to someone from some place cheap, but in Seattle… it’s not extravagant. He’s got a lot of stuff to fix, it’s not going to be an easy job, but if he actually pulls it off; he deserves a fat paycheck.
Boeing workers deserve a raise. A big one. They’ve been abused for a quarter century by GE retread Jack Welch acolytes who valued “shareholder returns” over all else. Those GE retreads created a huge level of animosity between the company and its own employees. C Suite has been kicking the employees for decades, and now the shoe is on the other foot. The employees deserve the right to kick back and get a fair deal that compensates them for the work they do. The guys to blame for all this mess are Stonecipher, McNerney, Jim Albaugh and Calhoun. These are the guys that created this animosity between company and employees. The only way to fix Boeing is to fix the relationship with the employees. It all starts from there.
Fake_astronot@reddit
TV over the fireplace. Gross.
andorraliechtenstein@reddit
Oh that is a nice house ! You can talk negative about the guy, buy at least he has some good taste (or his wife, lol).
EntropyWinsAgain@reddit
OP is just a clickbait posting karma-farmer
TheRoblock@reddit
Guy has a bladder issue
Recoil42@reddit
Pretty normal for 4 bedroom house to have 5 bathrooms. One's usually just a powder room, and then there's often an extra in the basement or whatever next to a rec room. Both the master bedroom and guest bedrooms will have private bathrooms, so then you just have one more shared between the other bedrooms. That's five right there. 🤷♂️
DUNGAROO@reddit
I like to think of myself as very pro labor but I can’t help but think this work stoppage is the union overplaying their hand. They were offered a 25% raise during a time of disinflation and they said “no F that we want 40%” and went on strike, knowing that the company they’re working for is in the dumps financially. Seems like a pretty good way to ensure your employer goes bust.
Appeltaartlekker@reddit
Mate, its not 25% raise. They would lose end year / production bonus and health care. Netto it would be a 9% raise. OVER FOUR YEARS. Thats a 2,25% a year. And then add that they didnt get proper raise in the last years with high inflation.
Please do some googling or YouTubing before primairy reacting.
Adjutant_Reflex_@reddit
Correct, it’s a 25% “raise” that’s starting from a salary that hasn’t kept pace since 2013, plus all of the other things you’ve lost. Also the fact that the “797 in Washington” clause is only valid until 2028, which is likely to expire before a decision to build is made and laughably easy for Boeing to sidestep.
Considering their cousins at Spirit went on strike and got something like a 40% raise, if I were a machinist I’d be viewing that as my starting point and I’d want a rock solid, indefinite guarantee any new Boeing products are built in Washington.
Appeltaartlekker@reddit
I dont think they mean the 797. The way they wrote it, means it is broader. For example if they make a (just as example) b777-645 or a 787,5 it would also be build there. So it's safe to say we won't be seeing any new variants of boeings the comming few years lol.
sofixa11@reddit
Not only are you missing the fact that it's not a 25% raise but 10% if you count in the removed bonuses (as you should), over 4 years.
Also, they haven't received a raise in years. Boeing's starting salary isn't far from minimum wage nowadays.
UnderstandingNo5667@reddit
Employer won’t go bust though as commercially it’s part of a duopoly with a fat order book and a key piece of the US military industry complex.
If it continues to slide it will be broken up and sold to a Lockheed or General Dynamics, but we are a long way from that and there’s zero appetite for it from the US government.
Tupcek@reddit
well, long backlog and duopoly doesn’t guarantee survival of company. They have lost billions every year at least since covid. Company losing billions every year will eventually go bankrupt, or be sold.
But being sold isn’t as rosy as you paint it to be - everybody wants only profitable parts of business. Majority of people will lose jobs.
If they really raised wages by 40%, their losses would go much higher and their chances of survival would be near zero.
But sure, some internet warrior can make up for the lost billions by claiming they have fat order book and key piece of US military industry complex. As long as it loses them money, why does it matter?
UnderstandingNo5667@reddit
Sorry to clarify, I assumed my point about there being zero appetite from the US Gov implied the lack of implicit rosiness in a break up and sell off, but that may not have been clear. That being said there’s no need for the name calling, we can have an adult discussion and you are more than welcome to disagree with my point 😚
Some analysis:
Boeings forward looking P/E is 39.50. If we look at other industry peers Airbus (34.18) and then Lockheed (19.98) , Northrop (18.80) we can see they compare pretty favourably to Airbus but seriously lag behind their defence industry peers and amazingly currently have a smaller market cap than Airbus and Lockheed.
Boeings book value per share is also garbage at $-29.20 and I agree that the balance sheet currently looks horrendous, the share price has further to go.
All this to say, it’s an interesting picture and they certainly have issues but a 40% wage increase in the short term with an increase in output and quality shouldn’t be viewed as a direct “loss”, in fact I’m sure Boeing would probably see it as a win if they can get some workers guarantees. The workers might be overplaying their hand but they know they have Boeing over a barrel, so milk it.
Ultimately it’s the ELTs job to work with unions and workers and get a plan together for investors that clearly shows a path forward back to profitability for their commercial arm. In the meantime they are too entrenched with the US military and the U.S. gov would likely bail them out (like the French gov did with Airbus) just to ensure the duopoly remains in play and the US remains at the table.
Tupcek@reddit
sorry for being rude
forward looking P/E is just projection. Their actual numbers are negative, thus no P/E. There is huge risk they won’t be actually able to achieve it, that’s why stock is so low.
By the way, not really sure where you got Airbus forward looking P/E. It’s 16.92 (https://finance.yahoo.com/quote/AIR.PA/key-statistics/)
40% wage increase would actually guarantee they won’t be able to achieve profit for years to come.
Their balance sheet is also negative, so the only thing holding them from bankruptcy are investors, which depends on share price. If they increased wages by 40%, even they would back out.
Government would have no reason to save Boeing - unlike 2008 crisis, there is no risk to the economy. They would just make sure someone pick the scraps (which they use), so the contracts could continue.
Most likely outcome, as I have said, would be that someone buys Boeing (as you said there are lucrative contracts and they are duopoly with Airbus), but get rid of everything that doesn’t make money. Large part, maybe majority of employees would get laid off. But unions doesn’t seem to care
UnderstandingNo5667@reddit
*the share price can absolutely continue to slide though and it absolutely will.
Beginning_Ad_6616@reddit
The issue for Boeing is gross mismanagement; the incentive has been to push aircraft designs and production out at all costs…this approach has tarnished Boeing’s reputation. We’ve see it this in the form of bad press from the 737 Max issues, 787 delays, and recently the accusations of production cutting corners to increase the pace of production.
Management is going to expect a lot of buy in for production staff if the pace is going to increase and they’ll get paid to make that happen. If management expects to get paid for Union workers busting their assess to meet targets they better make a commitment to financially reward those workers for making it happen too. If management expects production staff to buy in they’ll have to make them a partner in that goal. I mean; is ignoring labor worth throwing 15M in comp into the shitter?
Recoil42@reddit
A $4.2M house isn't much in Seattle.
This seems like a very strange, hollow complaint, honestly.
Crazyirishwrencher@reddit
If that house isn't much, then I have very skewed perceptions....
Recoil42@reddit
For a CEO of a company this size, it's not even notable. As per the article, it has four bedrooms, five bathrooms. There are literally millions of homes that size across the USA. Seattle is full of 'em.
There are easily senior-level engineers at Boeing with houses larger and more expensive than that.
Crazyirishwrencher@reddit
Its not a reserved choice, its a very targeted choice. He knew exactly what was awaiting him and chose a price point intentionally to undermine his detractors.
Recoil42@reddit
Bro should have unintentionally chosen a price point when buying a house.
Crazyirishwrencher@reddit
You should have stuck with the comment you deleted. It was still dumb, but it was slightly less dumb.
Recoil42@reddit
Nah, I didn't want to give you more of a chance to spout nonsense in public. This is enough as it is.
Crazyirishwrencher@reddit
Reddit thanks you for your service.
Recoil42@reddit
Tell you what: You go ahead and outline what size of house is appropriate for the CEO of a NASDAQ-listed company with a market cap of $100B+. Go right on ahead.
WesternBlueRanger@reddit
The cost of housing in some urban areas can be totally out of whack of what's considered average for the rest of the country.
Imagine a single story 2 bedroom bungalow costing $1-2 million dollars...
moving0target@reddit
Now we're talking Palo Alto.
KennyLagerins@reddit
For sure. Back 20 years ago my uncle sold a 3 bedroom, 2 bath house that was like 1,200 sq fr and right next to the highway in Palo Alto for like $1.1M. It’s sickening really.
Reasonable-World9@reddit
Wild that you're down voted. People here acting like he bought a $420 million mansion in Beverly Hills.
AceCombat9519@reddit
Good idea because he's able to visit both PAE and RNT factories. First one PAE has B787 B777x test facilities RNT B737 max and P-8s
Auton_52981@reddit
Well, if they are having financial trouble, maybe they should take the offer 25% pay increase and be happy? I can tell you 90% of the US workforce is not going to see anything close to that in the next few years. Honestly have a very little sympathy for those workers when I look at my 3.7% raise from last year, or the 2.6% raise from the year before.
colincrunch@reddit
over 4 years. 6.25% per year.
"Many of the workers who spoke to reporters said they considered the wage offer inadequate given how much the cost of living has increase in the Pacific Northwest. John Olson said his pay had increased just 2% during his six years at Boeing."
https://apnews.com/article/boeing-strike-machinists-contract-9f61a7d48675d1c3517233d40d4ec2b1
That's 0.33% per year.
Appropriate-Two-7293@reddit
Imagine defending a CEO. You people are fucked in the head and part of the problem.
JoeCartersLeap@reddit
Then find the address and strike outside the mansion.
derekneiladams@reddit
Let’s say he had a house half the cost, spread that delta across every Boeing employee it makes little difference.
P1xelHunter78@reddit
The 43 billion on stock buybacks from 2013-2019 are a pretty different song and dance. When’s it’s gonna stop?
cyberentomology@reddit
That’s merely the company reinvesting its profits…
cyberentomology@reddit
Most people don’t realize that CEO compensation is usually minuscule fraction of revenue. It’s even a tiny portion of payroll.
Appeltaartlekker@reddit
You know thats not the point. The point is that that money could have been spend better. For example on qualtiy processes or better working conditions. Perhaps stash it for better liquidity position.
It's absurd that management get so high bojusses, when their company is in a really bad spot, especially when they are mainly responsible for it.
I will never understand this American culture where the greediest are allowed to take it all...
Tupcek@reddit
Yeah, if he had done that, everybody could get a raise of…. $10 per month, for a whole year!
pheldozer@reddit
He was previously the CEO of Rockwell/Collins for 5 years after working there since 1987.
He would have been easily able to afford that house even if he never worked another day in his life.
rex3001@reddit
~~tRiCkLe dOwN eConOmiCs~~
doctorwandering@reddit
4.2M house in the PNW is a nothing sandwich of an article. This is not a mansion or anything unreasonably extravagant in this part of the country. Especially for the CEO of a major company