Boeing directors propose US$237.5 shareholder settlement for 737 MAX safety oversight

Former and current Boeing directors have stood by their actions in relation to overseeing safety aspects of the design and construction of the ill-fated 737 MAX twin-engine jet involved in two catastrophic and fatal crashes over a five-month period which killed a combined total of 346 passengers and crew. Despite this, they have agreed to pay shareholders US$237.5 million in settlement of their lawsuit against them relating to their oversight of the jet programme.

Subsequent to the two crashes, Boeing implemented significant improvements to both software and pilot training. In addition to the financial settlement, within a year the Board will be required to elect an additional director to the Board who has aviation/aerospace, engineering or product safety oversight expertise.

New York State Comptroller Thomas P. DiNapoli is one of the lead plaintiffs in the lawsuit and commented that the Boeing Board: “failed in their fiduciary responsibility to monitor safety and protect the company, its shareholders and its customers from unsafe business practices and admitted illegal conduct. It is our hope, moving forward, that the reforms agreed to in this settlement will help safeguard Boeing and the flying public against future tragedy and begin to restore the company's reputation.”

Additionally, the Board will be required to include three directors with comprehensive safety-related experience, while the planemaker would be required to amend its bylaws to require the separation of the CEO and Board Chair positions, and create an ombudsman programme for the next five years for Boeing employees who carry out certification work for the  Federal Aviation Administration (FAA) to be able to raise any concerns they may have over work being carried out on aircraft. The settlement would also require Boeing to provide annual public reports on safety related enhancements implemented by the planemaker since the 737 MAX air disasters.

In the settlement, Board members have steadfastly maintained that they were acting in the best interests of Boeing and the company's stockholders at all times. The settlement, less US$29.7 in legal fees, will be paid by Boeing's insurers. Boeing has already agreed to a deferred prosecution agreement with the U.S. Department of Justice including US$2.5 billion in fines and compensation directly related to the two fatal crashes. (£1.00 = US$1.37 at time of publication).