This study delves into the relationship between incentive-based compensation models and corporate governance, focusing on the Boeing 737 MAX incident as a critical case study. It thoroughly examines data from annual reports of Boeing Company (2007–2014) and the proxy statements issued between 2008 and 2015 (Boeing Company, 2008–2015), highlighting the impact of incentive-driven decisions, particularly by Boeing’s CEO. Post-2011, the CEO’s compensation, heavily linked to a risk reduction strategy, saw a substantial increase. This strategy received backing from a compensation committee, members of which shared the CEO’s General Electric background, raising concerns about potential conflicts of interest. The research emphasizes the urgent need to reassess corporate governance norms, focusing on executive pay structures and the independence of corporate boards. The Boeing 737 MAX incident starkly warns of the dangers and ethical issues associated with misaligned incentive frameworks. The study calls for reforms to ensure corporate decisions are ethically responsible and in harmony with long-term, sustainable business practices.

Boeing 737 MAX, corporate governance, incentive pay, research article, board independence

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