MIAMI – Boeing has struck a US$237.5m proposed settlement with shareholders to settle a lawsuit over the board’s safety oversight of the 737 MAX.
According to documents revealed on Friday, the proposed agreement will necessitate the election of an additional board director with expertise in aviation/aerospace, engineering, or product safety oversight within one year. The agreement was being filed in Delaware Chancery Court late on Friday and was confirmed by Boeing, according to Reuters.
The lead plaintiffs, New York State Comptroller Thomas P. DiNapoli and the Colorado Fire and Police Pension Association, said that if approved, the settlement would be the largest monetary recovery in a lawsuit filed in Delaware Courts over allegations that directors failed to protect against the risk of harm.
The Agreement in Detail
According to the proposal, which must be authorized by a judge before becoming final, the agreement calls for Boeing’s board of directors to always be required to have at least three directors with safety-related experience.
Under the terms of the agreement, Boeing will change its bylaws to ensure the separation of the CEO and Board chair roles, as well as establish an ombudsperson program for at least five years for Boeing employees working on airplane certification for the US Federal Aviation Administration (FAA).
Boeing would also be required to publish annual public reports on safety improvements made since the Lion Air (JT) and Ethiopian Airlines (ET) Boeing 737 MAX air catastrophes under the terms of the settlement.
The financial penalty will be paid by insurers to Boeing, minus up to US$29.7m in legal fees and expenditures to the shareholder attorneys, according to the filing.
Comments from New York State Comptroller
DiNapoli said that Boeing’s board “failed in their fiduciary responsibility to monitor safety and protect the company, its shareholders and its customers from unsafe business practices and admitted illegal conduct.”
The comptroller added, “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.”
According to the settlement, Boeing’s current and previous directors deny misconduct and claim they were operating in the best interests of Boeing and its stockholders.
Featured image: Boeing 737-7, the first variant from the MAX series, on its maiden flight. Photo: Brandon Farris/Airways