protections , and underfunding quality control . The goal is to become lean and mean , skating out to the very edge of cost reductions without jeopardizing the product . Or , well , at least not harming it too much .
You ’ d think that Boeing would not compromise on safety , given that one small production error or software glitch could down a plane worth hundreds of millions of dollars while killing hundreds of people in one blow . But you ’ d be wrong . Boeing is a world leader in stock buybacks . Between 1998 and 2018 , the plane manufacturer also manufactured a whopping $ 61 billion in stock buybacks , amounting to 81.8 percent of its profits . Add in dividends and Boeing ’ s shareholders received 121 percent of its profits . ( Data compiled by William Lazonick and The Academic-Industry Research Network , from Boeing 10-K SEC filings .)
How much is that really ? Well , according to Lazonick and Mustafa Erdem Sakniç , writing in The American Prospect in 2019 , Boeing facing the obsolescence of its 737 planes , could have created an entirely new airplane from scratch with fully modern technology . Instead , the company decided to reengineer the older model , name it the 737 MAX , and save $ 7 billion dollars . Perhaps not coincidentally , the $ 7 billion dollars “ saved ” is the amount of the stock buybacks Boeing made each year between 2013 and 2019 .
Rather than reinvesting more deeply in the company ’ s products , Boeing chose to pay off stockholders and Boeing executives . In the three years before Boeing software glitches caused two 737 MAX crashes in 2018 and 2019 that killed 346 people , Boeing ’ s CEO Dennis A . Muilenburg received $ 95.9 million in gross pay . Lazonick and Sakniç report that nearly all of it was via stock incentives , since his annual salary never exceeded $ 1.7 million . ( Perhaps again , not coincidentally , a Texas court ruled in October 2022 that the passengers killed in the two 737 MAX crashes are legally considered “ crime victims .”)
And just to make sure that stock buyback production would always be a top CEO priority , Boeing announced that “ beginning in 2014 , a significant portion of our named executive officers ’ long-term incentive compensation will be tied to Boeing ’ s total shareholder return as compared to a group of 24 peer companies .” If shareholder return is the metric used to judge executive performance , stock buybacks become an executive ’ s most valued tool .
What CEO could possibly resist pushing stock buybacks , given that nearly all of his or her income is based on stock incentives ?
Of course , every CEO , especially in the airline industry , will say that safety is their top priority . If pressed about stock incentives , they say there is no conflict between stock buybacks and safety . They say that the door plug blow-out had nothing at all to do with years and years of massive stock buybacks , nor all the cost-cutting to find the money for those repurchases . Give me a break ! Between November 1998 and January 2024 , Boeing filed 491 Worker Adjustment and Retraining Notifications ( WARN ) amounting to approximately 45,000 layoffs . This is in a company with about 140,000 employees . Might those layoffs have had something to do with why the FAA grounded 171 Boeing 737-9 MAX airplanes after the door plug blew out of the fuselage ? Might that be a reason why the FAA is now investigating “ manufacturing practices and production lines , including those involving subcontractor Spirit AeroSystems , bolstering its oversight of Boeing , and examining potential system change ?”
And it gets worse , because Boeing ’ s subcontractor , Spirit AeroSystems , subcontracted the faulty door plug production to another facility based in Malaysia , reports the National Transportation Safety Board . Good luck with that investigation . Will government regulators have the guts to expose the chain that connects Wall Street-induced stock buybacks to cost cutting to layoffs to subcontracting to safety problems ? The jury is out .
While the door-plug investigation will certainly put the spotlight on Boeing , the problem is systemic . In research for my book , Wall Street ’ s War on Workers , we found that more than 30 million workers have lost their jobs in the last three decades due to mass layoffs . Money that could have been spent on research , development , safety , and employee compensation in all kinds of industries was instead used to enrich shareholders . Literally trillions of dollars in stock buybacks have killed jobs and corporate reinvestment , leading to countless production problems throughout the economy . And that ’ s in addition to how workers , their families , and their communities have suffered indirectly during mass layoffs .
It ’ s a massive problem . Overall , approximately 70 percent of all corporate profits go into stock buybacks , up from two percent in 1982 . ( Data compiled by the Academic-Industry Research Network .)
Until stock repurchases are outlawed , as they essentially were before 1982 , Wall Street and its CEO partners in corporation after corporation will continue to deploy what Lazonick correctly calls a license to loot .
Next time you stuff yourself into an airline seat that is ridiculously cramped , just remember that seat you ’ re sitting in was shaped by stock buybacks . And if you get a coveted exit row seat to stretch out a bit , you ’ d better think good thoughts about the underpaid , overworked , sub-contracted workers who may have made the door .
In the three years before Boeing software glitches caused two 737 MAX crashes in 2018 and 2019 that killed 346 people , Boeing ’ s CEO Dennis A . Muilenburg received $ 95.9 million in gross pay .
62 x The Trial Lawyer