Common sense dictates that the management practices of Boeing’s former CEO Dave Calhoun are best to be avoided. Under Calhoun’s four years of failed leadership, Boeing’s manufacturing quality deteriorated significantly, and the company lost its competitive edge. The accountant was an influential board member for the previous ten years, championing the aggressive cost reductions and corner cutting that resulted in two 737 MAX plane crashes, killing 346 people.
Calhoun should be rotting in jail for the considerable harm he caused, but instead will keep more than $80 million he was paid for piloting the airplane company into the ground.
Calhoun was an example of the growing breed of imperial CEOs who supposedly are so incredibly brilliant and talented they don’t have to regularly mix with their corporate underlings. Boeing’s headquarters is in Virginia, but Calhoun operated from his luxury homes in New Hampshire and South Carolina. The Wall Street Journal reported last September that Calhoun made more than 400 trips on private jets to or from airports near Calhoun’s homes in the previous three years. Boeing in April revised significantly upwards to $979,000 the value of Calhoun’s personal use of corporate jetliners.
The revision came in wake of the IRS saying it planned to conduct dozens of audits on business aircraft involving personal use. As SNL’s “The Church Lady” liked to say, “Well how convenient.”
Calhoun was so arrogant that he once declared that Boeing’s headquarters was where he and CFO Brian West happened to be. The Journal reported that West worked out of an office New Canaan, CT, where a reporter one summer day found him parading around in shorts, a polo shirt, and slip-on shoes. The office, five minutes from West’s home, was diagonally across the street from the former office of a charity run by West’s spouse, Sheri.
Two senior Boeing executives at the time were based in Orlando: Michael D’Ambrose, the company’s former HR chief, and Brian Besanceney, who oversees communications.
Brian Niccol, the newly hired CEO Starbucks recruited to turn around its troubled business, is the latest chief executive who is supposedly so unbelievably amazing he needn’t be located anywhere near the company’s Seattle headquarters. Instead, Starbucks says Niccol can live in his home in Southern California’s tony Newport Beach and commute to Starbucks’ head office 1,000 miles away on a corporate jet, according to the new CEO’s offer letter. Starbucks will also cover the cost of a “remote office” for Niccol and “an assistant of his choosing.”
I know what The Church Lady would have to say about Niccol’s remote workplace privileges.
Niccol’s sweetheart arrangement, reportedly negotiated by board chair Mellody Hobson, includes an annual cash salary of $1.6 million, plus an opportunity to earn up to $23 million worth of share-based bonuses each year, as well as a cash bonus worth nearly $3.6 million depending on the company’s performance. He also received a $10 million signing bonus.
If paid out in full, Niccol’s contract could earn him $113.2 million. Starbucks lured Niccol from Chipotle, where he was paid $22.5 million in 2023 and $17.2 million a year earlier. I wonder if Starbucks had offered Niccol a mere $112.2 million if he would have still jumped at the opportunity to join the company.
Niccol established himself as a restaurant industry hotshot turning around Chipotle after the burrito chain was plagued with food-safety issues. Earlier, Niccol worked for Taco Bell, where he also achieved considerable success.
Notably, Taco Bell is based in Irvine, less than 10 miles from Niccol’s Newport Beach home. When Chipotle snared him as that company’s CEO, Niccol moved the company’s headquarters to Newport Beach from Denver.
Niccol apparently once saw considerable value working at the headquarters of the companies he lorded over. It’s telling that Niccol requires an in-person assistant, rather than one who works remotely. Perhaps he fears experiencing the loneliness GM CEO Mary Barra says she suffers.
As my former colleague Anthony Andora noted on LinkedIn, Niccol’s use of private planes makes a mockery of Starbucks’ feigned environmental commitments, which includes “innovating with more responsible stores, operations, manufacturing and delivery.” This might come as a surprise to board chair Hobson, the Chicago-based co-CEO of Ariel Investments, but there’s an airline called Alaska Airlines offering multiple daily flights from Newport Beach to Seattle for less than $700 round trip.
An added benefit of flying Alaska Airlines is that Niccol wouldn’t have to drink lousy Starbucks coffee. The airline last year upgraded its coffee offering to a blend from Portland-based Stumptown that was specially formulated for in-flight drinking.
Niccol’s potential environmental impact is massive. As reported by Fast Company, corporate jets typically have fewer than 20 seats, resulting in a considerably bigger environmental footprint than commercial jets.
Under the assumption that Niccol will make the flight between Newport Beach and Seattle weekly in a 2007 Gulfstream G550 (a 20-seat aircraft registered to Starbucks, according to FlightAware), that would emit 1,000 tons of CO2 annually, according to the International Council on Clean Transportation (ICCT).
That’s equivalent to the energy-use emissions from 118 homes for one year. It’s also more than 60 times the annual emissions from the average American, and about 1,800 times more CO2 emitted from flying than the average American aviation passenger was responsible for in 2019, according to ICCT, which did the calculations for Fast Company.
(I’d welcome ICCT’s calculations on the emissions caused by the lineups of vehicles I see at the drive-thru Starbucks I see in West LA.)
Niccol strikes me as the woke CEO the corporate media goes gaga about. Under his watch, Chipotle boasted of the company’s commitment to socially responsible ESG initiatives, including a pledge to reduce its emissions.
“ESG is what investors are talking about,” Laurie Schalow, Chipotle’s chief corporate affairs and safety officer, told Nation’s Restaurant News. “They’re more focused on environmental issues now than ever, so we talk about things like emissions reductions and what we’re doing to support a lower-carbon economy. We’re all more focused now.”
Not surprisingly, Chipotle recently celebrated Pride Month with a limited-edition crew uniform option featuring the ‘Love What Makes You Real’ tagline “to highlight allyship and acceptance in its restaurants.” Chipotle noted in a news release that LGBTQIA+ identification in the U.S. continues to grow, with more than one in five Gen Z adults identifying as LGBTQIA+*. The company said that 73% of restaurant “team members” across Chipotle are Gen Z, a not so veiled attempt to suggest that a significant portion of its workforce is LGBTQIA+*.
Starbucks isn’t alone ignoring Boeing’s ill-fated results with top executives too important to be ensconced at company headquarters. The Wall Street Journal reported that Victoria’s Secret recently hired Hillary Super from Rihanna’s lingerie brand to take over as its next CEO. Super will be based at the retailer’s New York City offices, not at the company’s headquarters near Columbus, Ohio.
The Journal said Charlie Scharf stayed in New York when he took over as CEO of troubled Wells Fargo in 2019. Scharf told investors when he started that he would make frequent trips to San Francisco, where Wells Fargo was based, and Charlotte, N.C., where many of its employees work. He is now in his fifth year in the job.
Lidiane Jones, CEO of online-dating app Bumble, has a contractual agreement that allows her to work remotely from Boston, rather than her company’s Austin headquarters.
Raj Choudhury, a professor at Harvard Business School who studies remote work, told CNBC there is a growing number of CEOs who are “working from anywhere,” though there is no comprehensive research on the topic.
“It’s becoming increasingly common because we’re still in a competitive labor market,” Choudhury said. “Executives aren’t accepting job offers if flexibility isn’t on the table.”
There’s some compelling anecdotal evidence that CEOs who are separated from their spouses perform poorly. Mark Fields, who refused to relocate his family to Detroit, bombed as CEO of Ford Motor Co. and was ousted after only three years on the job. Fields was forced to stop using Ford’s private jet for weekend trips to see his family in South Florida after it was revealed in 2005 the trip cost the company $214,479 in his first three months on the job. Ford said Fields made the decision voluntarily, and the company paid for his commercial travel.
The spouse of Ford’s current CEO Jim Farley, another executive dud, lives in the UK where she performs in a rock band. Farley and board chair Bill Ford, who respectively received $26.4 million and $20.6 million in 2023 compensations, also respectively spent $611,174 and $732,943 for personal use of aircraft.
To its credit, Ford acknowledges on its website there is often a disconnect between those who talk the sustainability talk and those who walk the walk.
Awing Ford’s Lincoln Nautilus
Speaking of Newport Beach and Ford, Cousins Rob and Jesse invited me to join them last night for dinner at newly opened Ocean 48 in Newport Beach’s Fashion Island Mall. The open-air retail emporium with its ocean views is the nicest mall I’ve ever encountered, but Cousin Rob advised me it caters to the city’s riffraff. An even more upscale mall is the nearby South Coast Plaza, where I imagine Brian Niccol and his family shop.
Fashion Island has a Lincoln showroom, and I opted to check out the Lincoln Nautilus, the red-hot SUV the All-In-On-America automaker manufactures in China. Ad Age recently declared the Lincoln Nautilus one of America’s hottest brands.
Understandably so — at least for buyers who don’t research their vehicles.
It’s been a long time since I’ve been jazzed by a vehicle, and the Nautilus is truly a sight to behold. It’s laden with some really cool tech, including a wrap-around digital dashboard, and has an impressive fit and finish that I’d expect from a luxury German or Japanese automaker. The 28-speaker sound system is awesome, and the vehicle comes with some innovative features like customizable ambient lighting and a digitally operated scent dispenser.
The higher end trim comes with seat massagers and other goodies. The hybrid version gets 30 miles per gallon, impressive for a vehicle of its size.
My golden retriever would love the Nautilus’ cavernous rear cargo area. I was more jazzed by the Nautilus than I was the Rivian SUV when I visited that company’s showroom. The $67,000 MSRP Nautilus I inspected was so much SUV for the money I feared I’d be taking advantage of CEO Farley if I bought it without contributing a little extra to help him sustain his outsized compensation.
Hard as this might be to believe, for a moment yours truly seriously considered buying a Ford vehicle. I promptly changed my mind after reading this mostly favorable Car and Driver review. The reviewer’s one critical issue: “an annoyingly wobbly front passenger seat.”
Silly me, the Nautilus is still a Ford product, where quality went from Job 1 to a seemingly nonexistent position.
I had a weak moment.