Vice Chancellor Zurn of the Delaware Chancery Court has entered an Order and Final Judgment approving a $237.5 million settlement that will end stockholders’ derivative litigation relating to Boeing’s oversight of the 737 MAX’s design and development. Co-Lead Plaintiffs the New York State Comptroller Thomas P. DiNapoli, as trustee of the New York State Common Retirement Fund, and the Fire and Police Pension Association of Colorado alleged that Boeing’s officers and directors breached their fiduciary duties to the company by dismantling Boeing’s lauded safety-engineering corporate culture in favor of what became a financial-engineering corporate culture.
The settlement represents the largest-ever Caremark cash settlement in Delaware court.
The terms of the settlement call for a $237.5 million cash payment to be made to Boeing on behalf of the company’s directors-and-officers liability insurers. The settlement also provides for significant corporate governance measures. Boeing will establish a five-year Ombudsperson Program that provides Boeing employees with a channel for raising internal safety issues. The Ombudsperson, who will report to Boeing’s Chief Aerospace Safety Officer, will also weigh any concerns about interference or transparency related to a Federal Aviation Administration delegation program. Boeing also agreed as part of the settlement to: (1) elect an additional board director with aviation, engineering or product-safety oversight experience; (2) codify separation of the chief executive officer and Board chairperson roles in its bylaws; (3) ensure at least three Board directors have “knowledge, experience and/or expertise with aviation/aerospace, engineering and/or product safety oversight”; (4) implement mandatory reporting from Boeing’s Chief Aerospace Safety Officer and Chief Compliance Officer to its Aerospace Safety Committee; and (5) ensure public disclosure of Boeing’s safety enhancement programs.