Boeing, Boeing, Gone

Boeing's (BA) sudden -- and very public -- ouster of CEO Harry Stonecipher reveals just how prickly its board has become in the wake of its high-profile ethics scandals.

In fact, some observers believe the board may have overreacted by quickly disclosing that Stonecipher had a consensual affair with another Boeing employee, even though she neither reported directly to him nor received favorable treatment as a result of the affair.

"This was a brutal revelation, and could have been done more quietly, but because of the sensitivity of the board after the procurement scandals, they appear to have gone overboard," said Paul Nisbet, analyst at JSA Research, an independent aerospace research company. (Nisbet doesn't own shares of Boeing, and JSA does no business with companies its analysts cover.)

Jeff Pittsburg, analyst with Pittsburg Research, said Boeing's board appeared to have panicked. "They moved so fast on it," he said. "There could have been a transition period here. I mean, he didn't steal money." (Pittsburg owns no Boeing shares, and his company does no investment banking.)

Boeing Chairman Lew Platt said Monday that having a consensual affair doesn't specifically violate the company's code of conduct, but that Stonecipher had violated the code's prohibition on activity that would embarrass the company or impugn its integrity. In an interview on the cable television news channel CNBC, Platt also said Stonecipher needed to be held up to a particularly high standard because he was at the helm of the company.

Ironically, Stonecipher's focus since stepping out of retirement and returning to Boeing in December 2003 had been on restoring its reputation after two scandals erupted related to government defense contracts. In one, the Air Force suspended Boeing from bidding on rocket launches after the company was found in possession of confidential bidding documents from rival Lockheed Martin (LMT). In the other, former Pentagon acquisitions official Darleen Druyun negotiated a Boeing job while overseeing military contracts. Stonecipher made frequent trips to Washington to meet personally with Pentagon officials and lawmakers. He also was a staunch advocate of company procedures aimed at preventing future ethical lapses.