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Originally published Friday, March 16, 2012 at 2:11 PM

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Boeing CEO McNerney got nearly $23M in 2011 compensation

Most of Boeing's top executives saw a sharp increase in compensation last year.

Seattle Times aerospace reporter

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Most of Boeing's top executives saw a sharp increase in compensation last year, due largely to a payout from a long-term incentive plan.

Chief Executive Jim McNerney earned total compensation of almost $23 million in 2011, up 16 percent from $19.7 million in 2010, according to the company's annual proxy filing with the Securities and Exchange Commission (SEC) on Friday.

That includes $8.7 million in annual and long-term incentive bonuses, compared with a bonus of $4.4 million in 2010. Boeing's top man locally, Commercial Airplanes Chief Jim Albaugh, took a year-on-year cut in total compensation only because he got an exceptionally large stock award in 2010.

Albaugh's compensation for the year was $8.5 million, down from $9.3 million in 2010.

His 2010 compensation included a $4.3 million stock grant in February of that year, soon after he moved here from St. Louis to take over as head of the Commercial Airplanes division.

But clearly the company was happy with Albaugh's 2011 performance. His incentive bonus last year was $2.8 million, up from $1.3 million in 2010.

Dennis Muilenburg, who replaced Albaugh as head of Boeing's defense and space division, earned $4.8 million total compensation in his first full year in the job.

James Bell, who has just retired as chief financial officer, had total compensation of $7.1 million, up from $5.4 million the previous year.

The SEC filing shows Bell retires with a pension plan that has a present value of $11.4 million, in addition to $5 million in equity and performance awards he receives upon retirement.

At the beginning of this month, Bell owned Boeing shares worth just over $33 million.

McNerney owned shares worth $125 million.

The sharply bigger bonuses in 2011 arose from a key long-term incentive plan where the payout is based on economic performance over the previous three years.

Last year, based on the company's performance for 2008 through 2010, that long-term plan paid out zero. Financial performance in the first two of those years was poor compared with the preset goals.

This year, 2008's bad bottom line — profits fell 34 percent year-on-year — dropped out of that calculation, replaced by the 2011 figures when profits rose 20 percent year-on-year. That triggered a long-term incentive-plan payout equal to 68 percent of the preset target.

Boeing issued a separate calculation for McNerney's "actual" compensation during the year.

This figure includes what the company considers the cash and cash equivalents going into his pocket in 2011, but it excludes stock and option awards that don't vest for some years, as well as an increase in the value of his pension due to a rise in the stock market.

Though those items are certainly real compensation, McNerney doesn't get them until some time in the future. Their value over time will swing with the share price.

Excluding those items, which are all included in the total compensation figure of $23 million filed with the SEC, Boeing said McNerney's total "actual" compensation in the year 2011 was $12.5 million, up from $10.1 million a year earlier.

Overall, the boom in pay reflects a booming aviation sector.

Last year, production at Boeing's assembly and fabrication plants in the Puget Sound region and across the country rose steadily, and the stream of airplane sales continued unabated.

Strategically, the year saw wild swings in the company's fortunes, but ended with Boeing in a strong competitive position against rival Airbus.

Boeing won the blockbuster Air Force refueling tanker contract. The 777 sold like hot cakes. A deal with the Machinists union ensured labor peace for five years. The 787 Dreamliner program continued to lag behind schedule, but at last Boeing managed to deliver the first one.

And though Airbus got the jump on Boeing when it launched the A320neo featuring new engines, Boeing regained its footing when it launched its 737 MAX.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

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