Lawmakers had a lot of questions at a January 2022 congressional hearing into what they called price-gouging in military contracting, featuring parts-supplier TransDigm Group.
Nicholas Howley, the company’s cofounder, board chair and former CEO, didn’t have a lot of answers.
One question: Did your company refuse to give pricing data to the military?
“I don’t know,” Howley replied.
Was Howley aware that his compensation as CEO was more than the CEOs of Raytheon, Boeing and Lockheed Martin combined?
“I don’t know.”
Seventeen times Howley ended up answering, “I don’t know.” Which infuriated Rep. Katie Porter (D-Calif.). “For $68 million a year,” she told Howley, referring to his 2020 compensation, “you need to know what’s going on in your company.”
What Porter and everybody else didn’t know: Howley has made out much better than that.
Since TransDigm went public in 2006, Forbes estimates that Howley has amassed a fortune of $1.1 billion. That’s based on his disclosures of TransDigm stock sales and publicly reported CEO compensation before he stepped down to become board chair in 2018.
To critics, TransDigm is a symbol of corporate greed. Its playbook: buy companies that are the only ones that make particular aircraft parts and jack up prices for customers who don’t have alternatives. Reviews by the Pentagon’s inspector general in 2019 and 2021 found that immediately after acquiring a company, TransDigm raised prices on 44 of 46 items, and reaped profit margins as high as 4,436% over the 15% that investigators deemed reasonable. It was all legal. Still, a former employee described TransDigm as a “cancer.” Another told Forbes that the company is the “Satan of aircraft parts.”
Read the full story on Forbes: www.forbes.com/sites/jeremybo...
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