We all know that over 340 people died on crashed 737s, that Boeing paid the DOJ $2.5 billion dollars for criminal conspiracy due to misrepresentations by employees to the FAA, that the chief pilot was indicted on criminal charges.  Now the Boeing directors have reached a proposed settlement of about $238 million to compensate pension funds which lost investment value in their Boeing holdings. (A court still needs to approve this settlement.)

The directors were accused of gross negligence and, indeed, willful breach of fiduciary duty in ignoring warnings about safety issues in the rush to get to market.  A settlement means directors will not be faced with a trial as to their alleged willful misconduct.

More interesting than the money (if anything can be more interesting than money) is the shopping list of corporate changes to which Boeing is agreeing: instituting missing reporting systems on safety and concerning what is told the FAA, adding a director with aircraft experience so there are more intelligent eyes on the company, establishing an ombudsperson for five years, guaranteeing that at least three directors have engineering or safety experience, splitting the offices of CEO and board chair.

There is no “takeaway” from this settlement relating to willfully ignoring safety concerns –you don’t need courts to inform directors about that — but there is learning here as to the standard of care which directors must bring to supervising companies which face the public and involve physical risks.  The ERM (enterprise risk management) function needs to have robust reporting systems that report to the board; boards cannot say they did not know what they could have known.  The duty to oversee, born in case law but little used for many years, now is front and center as to board governance.