Boeing Co on Monday said it fired Chief Executive Harry Stonecipher after he had an affair with a female executive that violated company rules, saying his leadership abilities had been damaged. Chairman Lewis Platt said on a conference call that Stonecipher was not ousted because of the affair, but he declined any further comment on the circumstances.
Boeing, the top US aircraft maker whose ethics have been under scrutiny, said its board "asked for and received" Stonecipher's resignation. The company said the board took action after another employee told it about the relationship, citing correspondence between the two.
"As we explored the circumstances we felt there were some issues of poor judgement that would impair his ability to lead," Platt said on the conference call.
He said the female employee's career and compensation had not been affected by the relationship, which began this year. "It's not the fact that he was having an affair," Platt said.
The relationship with the female employee, who did not report directly to Stonecipher, was consensual, Boeing said.
Stonecipher, 68, is married and has two children and two grandchildren. Boeing Chief Financial Officer James Bell, 56, will succeed Stonecipher on an interim basis, the company said.
Stonecipher, who took the helm at Boeing in December 2003 in a bid to put a series of defence procurement scandals behind the company, had been credited with a more aggressive marketing approach that had seen a revival in commercial jet orders at the Chicago-based company.
But the procurement scandals, which led to the resignation and conviction of its former CFO, have put the companies ethics in the spotlight and led to various efforts to tighten its internal code of conduct.
"Harry ... was really the staunchest supporter of the code of conduct," Platt said. "He drew a very bright line for all employees."
Platt will take an expanded role at the top US aircraft maker, which said the resignation was unrelated to the group's operational performance or financial condition.
Boeing will continue its stock buyback program unchanged, Bell told analysts.
"It's a shock. Stonecipher was doing a great job," said Cai Von Rumohr, an analyst at SG Cowen. "The big issue is who is the next guy and it's a more important choice than at other points because they are just starting to claw back market share."
3M Co Chairman W. James McNerney has been rumoured as a candidate before, he said.
Boeing shares, which had surged 11 percent over the past four weeks, were down 1.5 percent, or 85 cents, at $57.53 on the New York Stock Exchange. The shares last week hit a post-September 11, 2001 high.
Stonecipher, who had been president and CEO of McDonnell Douglas Corp until its merger with Boeing in 1997 and was Boeing's president and COO from 1997 to 2001, will also leave the company's board.
"Boeing definitely has had issues with violations of conduct and, as a result, are having to take a very hard line," said Rick Meckler, president of investment firm Libertyview Capital Management.
"Let's face it, the environment for companies has changed," he added. "Boards are taking a more active role in dealing with problems at their companies."
Bell, a 32-year Boeing veteran, is not a candidate to permanently replace Stonecipher as CEO, the company said. He is the first African-American to ever hold the top job at Boeing.
The plain-spoken Stonecipher had said in a recent analyst conference call that he was willing to stay at the company at least until its 2006 annual meeting.
"I'm going to be around for awhile, but if they find somebody they like to run this job better, then I'm ready to leave tomorrow if they want me to," he said last month.
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