Lofty pay package for Boeing CEO

James McNerney will get $1.67 million in salary and bonus this year to run Boeing, but he can look forward to considerably more lucrative paydays down the road.

McNerney, who was recruited from 3M to be Chicago-based Boeing's new chairman and chief executive, also received 391,000 restricted shares of company stock — worth $25.1 million at yesterday's closing price — to compensate him for unvested options and other awards he had to forfeit on leaving 3M.

The 55-year-old executive also will get supplemental retirement benefits estimated to be worth $22 million, though he must stay at Boeing at least three years to qualify for them. He had a similar retirement package at 3M, where he was CEO 4-½ years.

Assuming McNerney stays at Boeing until Jan. 1, 2011, when the last restrictions on his stock expire, the cumulative value of his salary, bonus, stock and retirement supplement could exceed $72 million.

Boeing spokeswoman Anne Eisele said McNerney's package is similar to the one he had at 3M and "appropriately recognizes the value an executive like Mr. McNerney brings to Boeing."

"Our intent was to make him whole and move him laterally over to Boeing," Eisele said. "There was no special inducement, no signing bonus."

McNerney, named last week to lead Boeing, will receive salary at an annual rate of $1.75 million, according to the employment agreement Boeing filed yesterday with the Securities and Exchange Commission. Since he is taking over midway through the year, he'll get about half that amount, around $875,000, in 2005.

According to the agreement, McNerney also gets a guaranteed cash bonus this year of $2,975,000, or 1.7 times his base salary, less any bonus from 3M for the first half of the year.

Minnesota-based 3M already has paid McNerney almost $2.2 million in bonus this year, Eisele said, meaning he'll get $795,000 in bonus from Boeing.

McNerney's base pay can be raised in future years but not cut, and he will be able to earn bonuses of as much as 2.3 times his base pay.

He also will receive relocation expenses, life insurance with a $267,937 annual premium, and miscellaneous other benefits.

Last year, 3M paid McNerney $1.62 million in salary, $3.52 million in bonus and almost $786,000 in other compensation. In February, its board gave him a 6 percent raise in base pay and target bonus.

As of the end of 2004, McNerney had vested options for more than 2 million 3M shares, with an estimated fair value of $48.3 million. He has 90 days to exercise those options.

Harry Stonecipher, Boeing's chief executive who resigned in March, received $1.5 million in salary and $1.26 million in bonus last year.

James Bell, the company's chief financial officer and interim CEO after Stonecipher's resignation, received almost $1.1 million in salary and bonus last year.

Drew DeSilver: 206-464-3145 or ddesilver@seattletimes.com