Boeing Chairman Resigns Following Ethics Questions

Boeing Chairman Resigns Following Ethics Questions

By Dave Carpenter
Associated Press
December 1, 2003
  
CHICAGO -- Boeing Co. chairman and chief executive Phil Condit
resigned unexpectedly only days after the huge aerospace manufacturer
fired two other Boeing officials for an alleged ethics breach.

The company's board accepted Condit's resignation after deciding "a
new structure for the leadership of the company is needed," according
to a Boeing statement released Monday.

"Boeing is advancing on several of the most important programs in its
history and I offered my resignation as a way to put the distractions
and controversies of the past year behind us, and to place the focus
on our performance," Condit, 62, said in a statement.

Company spokesman John Dern insisted Condit was not fired and said the
board accepted his voluntary resignation "with great sadness."

Boeing has been roiled for months by ethical controversies over the
aggressive methods it used to obtain lucrative defense contracts.

The board named former Hewlett-Packard Co. president and chief
executive Lewis E. Platt, 62, as non-executive chairman and former
Boeing president and chief operating officer Harry C. Stonecipher, 67,
as president and CEO, effective immediately.

The shake-up comes a week after Boeing unexpectedly fired its chief
financial officer, Mike Sears, for unethical conduct, saying he
negotiated the hiring of an Air Force missile defense expert while she
was still working for the Pentagon and was in a position to influence
Boeing contracts. Sears has denied any wrongdoing.

Sears was dismissed along with the former Air Force official, Darleen
Druyun. She was hired earlier this year as vice president and deputy
general manager of Boeing's Missile Defense Systems unit.

Boeing made no connection between Condit's departure and the firings
in its Monday announcement. Dern said the board has been meeting for
the past several days to discuss a course of action, but he declined
to say when the resignation was made or accepted. 

"To link it to any single event would be a mistake. But there have
been distractions over the last year, and both Phil and the board
agreed that this decision was a way to put these distractions behind
the company," he said. "The board felt that changing leadership as
well as the structure ... would help drive the company forward." 

Condit had been with Boeing since 1965, when he joined the company as
an aerodynamics engineer. He has been chief executive since 1996 and
chairman since 1997, the company's seventh chairman since it was
founded in 1916.

Platt praised Condit's "characteristic dignity and selflessness in
recognizing that his resignation was for the good of the company" and
said the board "is in unanimous agreement that the company has been
pursuing the right transformation strategy and that Boeing is in
excellent financial condition."

"We have the right strategy," Stonecipher added. "The task before us
is to execute. ... Boeing is a great company with tremendous
capabilities to define the future in each of our markets and deliver
consistent, profitable growth."

For decades, Boeing was primarily an aircraft maker, earning most of
its money from its jetliners. But in the aftermath of the Sept. 11,
2001, terror attacks, Boeing's defense division now brings in more
revenue than commercial airplanes. Boeing has expanded its space,
communications and other businesses as well.

Rival Airbus expects to eclipse Boeing this year as the world's
largest commercial jet manufacturer.

Defense Department investigators are examining a newly approved deal
to acquire 100 Boeing 767 planes for use as midair refueling tankers.

The deal was criticized this fall when documents revealed that Druyun,
then the principal deputy assistant Air Force secretary for
acquisition and management, told Boeing that Airbus had submitted a
bid $5 million to $17 million less per plane than Boeing's offer.

Last Friday, two senators who have long criticized the plan -
Republicans John McCain of Arizona and Peter Fitzgerald of Illinois -
said in a letter to Defense Secretary Donald Rumsfeld that it would be
"irresponsible" for the department to go ahead with the deal without a
full review into the firings.

The agreement, in which the Air Force would lease 20 tankers and buy
80, was authorized as part of the defense appropriations bill signed
Nov. 24 by President Bush. 

In July, the Pentagon punished Boeing for stealing trade secrets from
rival Lockheed Martin to help win rocket contracts. Boeing has been
indefinitely banned from bidding on military satellite-launching
contracts, which has already cost it seven launches worth about $1
billion.

A spokesman for the union representing engineering and technical
workers at Boeing called Condit's departure "a real shock" and said
there would be trepidation among the workers at Stonecipher's
ascension to CEO.

"There was no love lost between Mr. Stonecipher and the
SPEEA-represented employees three years ago when our union went on
strike," said Bill Dugovich of the Society of Professional Engineering
Employees in Aerospace.

Boeing's stock fell 13 cents, or 0.3 percent, to $38.26 in morning
trading on the New York Stock Exchange.

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