Illustration: Aïda Amer/Axios
Boeing is navigating how to handle the $100 million compensation fund it set up for the families of crash victims, even as a pledge by its former CEO to fatten the fund seems uncertain.
Why it matters: Boeing is pulling out all stops to appease Wall Street over the grounding of its 737 MAX, but it is saying little about the issue of restitution for the families of the hundreds who died due to faulty technology onboard its flagship plane.
The backstory: Last year, Boeing made a big splash when it announced it would set aside $100 million for a victims' compensation fund. The move was among the first by the company to stymie the worst P.R. crisis in its 103-year history.
- In October 2018, a Lion Air 737 MAX jet crashed into the Java Sea, killing all 189 people on board. Six months later, an Ethiopian Air 737 MAX flight crashed after takeoff, killing all 157 inside.
- Those events prompted a global grounding of Boeing's biggest money-making jet — and a slew of more lawsuits.
There were immediate calls for Boeing's chief executive, Dennis Muilenburg, to step down, but — before he did so — he publicly pledged before a crowd of hundreds to contribute "substantial amounts" to the 737 MAX victims' fund.
- At the time — November — Muilenburg said he planned to donate part of his own pay to the victims' compensation fund or a charity, wherever "the greatest need is at the time of vesting," a Boeing spokesperson clarified to Axios.
- The compensation — Boeing shares, which Muilenburg still received as part of his exit package — will vest soon.
- In response to a request for comment, Boeing said it had no update on Muilenburg's promise.
The state of play: Of the $100 million Boeing allocated to victims, Boeing subsequently said only half of that sum would be paid directly to families. In the same announcement, the company said it had hired victim compensation attorney Kenneth Feinberg to oversee those payouts, which is being evenly split among families who file claims. (Feinberg has worked on compensation for those impacted by 9/11 terrorist attacks, as well as the BP Deepwater Horizon oil spill.)
- So far, 266 families have received $144,50o each, Camille Biros, a partner at Feinberg's firm, tells Axios. Lawyers representing the families say that's paltry.
What they're saying: "Half of the fund for relief is a problem," Bob Clifford, an attorney who's leading a consolidated case of more than 100 suits against Boeing, told CNN at the time of Boeing's announcement.
- Mike Andrews, an attorney at Beasley Allen Law, who represents lawsuit against Boeing, tells Axios: "You've got $50 million for hundreds of families, as compared to the $63+ million compensation package that Dennis Muilenburg received."
- "A lot of my clients wrote me and said: 'wow, do you see the amount [Muilenburg] got in his severance package? And my husband is dead,'" Floyd Wisner, an aviation attorney, tells Axios.
By the numbers: Muilenburg will not get any severance and will forfeit stock awards valued at $14 million, according to a recent company filing. But he still walked away with other stock and pension awards worth $62.2 million, the New York Times reported earlier this year.
What's new: Boeing has asked Feinberg to take a bigger role with the compensation fund.
- He will figure out how to allocate the remaining $50 million — the plans for which, until now, remained unclear.
- He will work with victims' families to figure out the appropriate way to use that money.
The $50 million probably won't be paid out directly to the victims' families, but rather toward a project that would honor the victims of the crashes and serve the impacted communities, which span more than 35 countries.
- Feinberg's firm confirmed it was in "preliminary discussions" with Boeing about whether they will be involved in figuring out what to do with the additional funds.
- Boeing said it has "started the process of engaging with families, governments, community leaders, and others about how best to allocate the $50 million set aside" victims of the two crashes."
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