Top Boeing shareholder Vanguard voted against chair Kellner

Top Boeing Co (BA.N) shareholder Vanguard Group voted against the company’s chairman Lawrence Kellner, citing “control failures” under its audit committee after two 737 MAX plane crashes, according to a stewardship report issued on Wednesday that will further pressure the planemaker.

Boeing on Monday disclosed a relatively high number of critical votes were cast against Kellner and other directors at its annual meeting, and said a majority of votes were cast in favor of a shareholder proposal requiring an independent board chair. Vanguard also backed that proposal, according to its report.

Separately, large Boeing shareholder BlackRock Inc (BLK.N) said it voted against four other Boeing directors, citing safety concerns, but said it supported the company on other items.

A Boeing spokesman did not immediately comment on the asset manager reports.

The company on Wednesday said it would cut its workforce by about 10%, further reduce 787 Dreamliner production and try to boost liquidity as it prepares for a years-long industry recovery from the COVID-19 pandemic.

Vanguard and BlackRock this year have disclosed more details about their influential proxy votes.

The two top U.S. asset managers – with some $13 trillion between them – rarely oppose directors, but when they do the votes can lead to changes such as when Vanguard cast critical ballots at Wells Fargo & Co (WFC.N) in 2017.

Vanguard held 7.2% of Boeing’s shares according to the company’s proxy. Kellner received support from 74% of votes cast on Monday, Boeing said, below the usual level of 90% support or more that is typical for directors of large U.S. companies.

Kellner, a former Continental Airlines CEO, was named Boeing’s independent chairman in December as part of a broader management revamp including the resignation of CEO Dennis Muilenburg.

Kellner had headed the Boeing board’s audit committee, responsible for overseeing risk at the time of the 737 MAX crashes. Although the company then formed a new safety committee, Vanguard said in its report that “given the control failures under the audit committee, we believe the committee chair should be held accountable.”

BlackRock said on its website on Tuesday that it voted against four other directors, all Boeing board members in 2011 when it announced the 737 MAX.

“While the company has created oversight structures that aim to mitigate risks that resulted in the 737 MAX crisis, we are holding these directors accountable for board decisions that had significant adverse, material impact,” BlackRock said.