Pressure on Boeing Moves to Lead Director Duberstein
Boeing Co.'s (NYSE: BA) lead director, Kenneth Duberstein, finally gets a chance to lead. With the company's CEO James McNerney fighting for his job because of growing and severe problems with the flagship 787 Dreamliner, it falls to Duberstein to get the board of directors to consider who should run Boeing as its fortunes deteriorate. That person becomes less and less likely to be McNerney.
Duberstein is something of a political hack, but that does not absolve him of his fiduciary responsibility at Boeing. A director since 1997, years before the Dreamliner was even a dream and six years before McNerney became CEO, all of Boeing's 787 trouble has happened on Duberstein's watch. He had the privilege of being White House chief of staff from 1988 to 1989. Between government jobs, he had the distinction of working for lobbying operation Timmons & Company. Duberstein also has worked on behalf of Goldman Sachs Group Inc. (NYSE: GS) to protect the investment bank's interests in Russia.
As current head of the Duberstein Group, which brought in $7,729,496 in lobbying income in 2012, according to Open Secrets, he and his staff worked for United Continental Holdings Inc. (NYSE: UAL), which is a Boeing customer. Duberstein Group also represented the interests of troubled Chesapeake Energy Corp. (NYSE: CHK).
Whatever Duberstein's past includes, he and his fellow board members need to contend with the reality that the government probe of the 787 could continue indefinitely. The problems with the design and manufacture of the Dreamliner occurred under James McNerney. Boeing needs a new outside CEO, independent not only of past relationships with the board, but also any past relationships with Boeing in general. It should be a CEO who is viewed by customers, investors, suppliers and employees as a leader who can bring a cold eye to the series of problems that have undermined confidence in the 787. Boeing's future has been threatened, and Duberstein needs to lead an effort to restore its reputation and operational excellence.
Filed under: 24/7 Wall St. Wire, Corporate Governance Tagged: BA, CHK, featured, GS, UAL