Why didn't shareholders rein in Boeing mismanagement?

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Shareholders could have corrected some of the company’s errors, but buybacks kept them mollified.

By Chris Hughes / Bloomberg Opinion

There are many reasons Boeing Co. has fallen into such disrepair that it needs to sell shares for a potential $19 billion cash injection, and just as many lessons to draw. But one factor arguably underpins them all, and shareholders should be taking a long look in the mirror.

Boeing announced Monday its plans for the share sale, which it needs to help slash nearly $50 billion of net debt, protect its investment-grade credit rating and, ultimately, lay the financial foundations to build a new plane. The origins of this dire situation go back decades, long predating the fatal crashes of 2018 and 2019 involving the 737 Max. They also extend beyond Boeing’s protected status as one half of a critical duopoly, too big to be taken over and too important to be fully restrained by market and regulatory forces.

The history is well chronicled but worth recapping. Analysts and academics point to Boeing’s 1997 acquisition of McDonnell Douglas as a turning point. The defense contractor was struggling with the post-Cold War decline in military spending and its own failure to innovate. Rather than the buyer’s culture dominating the combination, the opposite seems to have happened. The deal was, argues Agency Partners analyst Nick Cunningham, a de facto reverse takeover of Boeing.

The strategy and execution in the subsequent years arguably sowed the seeds of this week’s cash call. Boeing suffered mighty cost overruns in developing the 787. Wary of the snags with such big engineering projects, Cunningham suggests, the company dithered over developing a successor to the workhorse 737. When European rival Airbus SE stormed the market with a successful revamp of its A320, Boeing responded with what turned out to be an unsafe revamp of the 737 to create the Max; with tragic results.

https://www.heraldnet.com/opinion/comment-why-didnt-shareholders-rein-in-boeing-mismanagement/

While the editorial gives a good analysis of Boeing's problems, shareholders generally do not get involved with the day-to-day operation of a company.