News
Boeing board in US$2.37 million shareholder lawsuit settlement
November 8th 2021
Boeing will make safety improvements that include an employee ombudsman as part of a US$237.5 million settlement of a lawsuit stemming from the 737 MAX fatal accidents and subsequent grounding. Read More » The “derivative” lawsuit was filed on behalf of two pension fund shareholders, the New York State Common Retirement Fund and the Fire and Police Pension Association of Colorado, against Boeing’s board of directors. A derivative lawsuit allows shareholders to sue a board if they believe directors breached their fiduciary in a manner that harmed the company. In this case, the plaintiffs sought damages and corporate governance reforms after two fatal 737 MAX crashes involving Indonesia’s Lion Air and Ethiopian Airlines led to the type being grounded. Under the proposed settlement, which requires court approval, Boeing must adopt enhanced safety and oversight protocols including the introduction of an ombudsman who will provide a channel for Boeing employees to raise work-related concerns and the appointment of another director with aviation, engineering, or product-safety oversight experience. It also means the company will recover $237.5 million from the directors' insurers, although the settlement indicates lawyers could take up to 12.5% of the total payout. The directors being sued denied any wrongdoing, but New York State Comptroller, Thomas P. Di Napoli, said the pension funds sued the board because it failed in its fiduciary duty to monitor safety and protect the company, shareholders and customers. “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,’’ Di Napoli said in a statement. “This settlement will send an important message that directors cannot short change public safety and other mission critical risks." Boeing said in a statement it had taken significant actions to reinforce and strengthen its commitment to aviation safety since the MAX crashes “Today’s proposed settlement builds on those actions with additional oversight and governance reforms that will further advance safety and quality in the work that we do,” the company said.
