3M's CEO named to head tarnished Boeing

McNerney to take reins of aerospace giant hurt by scandals at the top

July 01, 2005|By ST. LOUIS POST-DISPATCH

ST. LOUIS - Boeing Co. named W. James McNerney Jr. as the new leader of the aerospace and defense giant yesterday, picking the 3M Co. chief over two senior Boeing executives.

But in McNerney, Boeing will be getting one of the bluest of blue-chip executives.

Trained by General Electric Co. as a manager and educated at Harvard and Yale, McNerney vowed yesterday to continue Boeing's recent momentum to restore a tarnished image with the Pentagon and to overtake European nemesis Airbus SAS as the world leader in commercial jet deliveries.

"As I thought about the opportunity, I thought about the greatness of this company, and I thought about why this needed to be a great company for a lot of constituencies," McNerney told analysts and reporters during a conference call.

McNerney becomes Boeing's fourth leader since December 2003, when an ethics scandal threatened to derail the company and started a merry-go-round of executive changes.

The scandal, involving two Boeing executives, forced Philip M. Condit to resign as chairman and chief executive officer. Harry C. Stonecipher, once Boeing's president, came out of retirement to replace Condit.

But this March, the board forced Stonecipher to resign after his extramarital affair with a Boeing employee was outed by an anonymous tipster. Chief Financial Officer James Bell served as interim chief until McNerney's appointment.

The seeds of turmoil were planted in 2002, when Darleen Druyun, then a top procurement official for the Air Force, accepted a job at Boeing while she still held sway over billions of dollars of contracts involving the company.

Michael Sears, then Boeing's chief financial officer, negotiated the job offer, even though he knew she had not removed herself from this involvement.

Ultimately, Druyun and Sears pleaded guilty to criminal charges for their roles in the illegal employment talks and were sentenced to short stints in federal prison.

If Boeing isn't ethical, great or even good, a lot is at stake, McNerney told the St. Louis Post-Dispatch in a telephone interview yesterday.

The Chicago-based company develops some of this nation's most sophisticated weapons systems and represents a huge manufacturing base with tens of thousands of aerospace jobs.

"You feel that obligation a little more in the Boeing environment than in the purely commercial environment," said McNerney, who at 3M led a company known for Post-it Notes and Scotch tape.

McNerney, 55, will be Boeing's chairman, president and chief executive, overseeing a company with 159,000 employees and annual revenue of about $58 billion this year. Boeing builds tactical fighter planes in St. Louis and makes 737 and 747 passenger jets in Washington state.

"In our minds, and it was clear and wasn't close, Jim McNerney best met the criteria compared to all other inside and outside candidates," Lewis Platt, Boeing's lead director, told the Post-Dispatch.

"We knew that we had two strong inside candidates," Platt said. "We knew they would be disappointed. But at the end of the day, that's why we had the criteria, so we could make a non-emotional, really good judgment, and we felt Jim McNerney was the best person for the job."

Boeing shares rose 7 percent in trading yesterday on the New York Stock Exchange. The stock closed at $66, up $4.33. The stock's all-time high, reached in late 2000, is $69.94.

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