The Air Force froze the contract that Druyun had negotiated, precipitating Condit's resignation and retirement.
Condit had joined Boeing in 1965 as an engineer and moved into management in 1973, working on marketing the 727. He completed an MBA at Sloan in 1975 and returned to Boeing, progressing rapidly up the ranks. By 1983, he became VP and General Manager of the 757 division before moving on to other VP posts. In 1996, he moved from President to CEO and a year later was named Chairman.
There is little to indicate that Condit himself was a significant contributor to the governance problems at Boeing. Although he was an engineer by training, he spent much of his time at Boeing in marketing. The hiring manager, Bill Erskine, who had hired Ken Branch in the first place, had just completed ethics training. However, the subsequent denial of the scope of the problem, even at the highest legal levels of Boeing, indicates that the corporate culture did not value ethics at this time, at least not as much as it valued the rocket contract. Condit's immediate resignation may be taken as a sign that he realized he had failed to preserve Boeing's ethical standards, and did not have the degree of control over the company that he thought he had. However, some of the evidence that turned up during the Druyun investigation indicates that Mark Sears' actions where known in other parts of the executive suite. Though it cannot be concluded definitively, it can be inferred that the lack of attention to ethical issues was at least tacitly accepted by Condit.
Compounding this issue is the fact that Condit came to the CEO position when Boeing was making its big push back into the military business. Thus, he may have staked his personal future and reputation with the company on the rocket contract and therefore been willing to overlook the espionage committed by Ken Branch.
Another powerful board member at the time was Harry Stonecipher. He was President and CEO of McDonnell Douglas prior to its acquisition by Boeing. After the acquisition, he remained head of the McDonnell Douglas business, became COO of Boeing and was Vice Chairman of the Board. Stonecipher had a long relationship with the Department of Defense, such that he was hired by Sundstrand, another aerospace firm. His main role there was to repair the relationship between that company and the DoD (Boeing, 2009).
Stonecipher's functional roles put him in charge of many human resources-related tasks, as well as building relationships between the company's myriad stakeholders. As such, Stonecipher was in position to strongly influence governance issues with respect to hiring, in particular with respect to ex-Lockheed staffers like Ken Branch. Moreover, Stonecipher was in charge of McDonnell-Douglas, the firm at the center of the rocket competition. During this competition, Druyun apparently gave Stonecipher, illegally, confidential information regarding Lockheed's bid (Bowermaster, 2005).
Stonecipher replaced Condit as CEO, with a stated mandate to clean up Boeing's governance issues. Yet there is a strong case to be made that Stonecipher had more at take personally in the rocket contract, a stronger relationship with Druyun, and more direct involvement in Boeing's hiring practices through his background in human resources than did Condit. Ultimately, Stonecipher's tenure lasted only a couple of years, before he was forced to resign as the result of a sex scandal.
As of 2002, Boeing had already met most of the requirements of the newly enacted Sarbanes-Oxley. These included having independent, non-employee board members; having a written charter for key board committees and that key board committees are comprised of independent directors (Boeing 2002 Annual Report). Some of these included John E. Bryson, who was a Chairman of the Board. He served on Boeing's Board since 1995 and was on the Compensation, Governance and Nominating Committee. Bryson was President of Edison International, the public utility holding company. Bryson, a lawyer and former environmental activist, Bryson was seemingly unaware of the issues facing Boeing.
The Compensation, Governance and Nominating Committee was entirely comprised of non-employee directors, including Kenneth Duberstein (Chairman of the Duberstein Group, a lobbying firm), Paul Gray (an engineering professor at MIT) and John F. McDonnell (retired, McDonnell-Douglas). The chairman of the committee was Lewis Platt, then President and CEO of Hewlett-Packard. Of these, John F. McDonnell cannot be considered truly independent, as the son of the founder of McDonnell Aircraft Corporation. Duberstein's independence from military work is questionable, as a former Chief of Staff to Ronald Reagan. Only Gray and Platt can reasonably be assumed...
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