National Post (National Edition)
Bombardier’s failures don’t deserve any rewards.
In a column Tuesday, my colleague Terence Corcoran made the case that Bombardier executives are worth the $32 million they were paid last year, and the $10 million raise they received while begging subsidies from the federal and Quebec governments.
Corcoran is almost always right, but almost isn’t 100 per cent, and this is one of the outliers. “Whatever one might think of the billiondollar bailouts and government loans and what appears to be Quebec Inc. cronyism, there is good reason to believe the aerospace company’s executive payouts are warranted,” Corcoran claimed, before asking, “Anybody else around who can do the job? If they can, how much would they want to be paid?”
Well, actually … yes. I’ll take the CEO job for half Alain Bellemare’s $9.5 million. I’m absolutely confident I can fail to build streetcars on time or deliver them as scheduled; I definitely know I can inspire lawsuits from angry customers and go grossly over budget on fancy new jets; I believe that, without much assistance, I can beg for money from the Quebec government and plead for another billion or two from Ottawa; and I am relatively certain I can upset the provincial government enough to warrant the premier phoning me up to ask what in God’s name I think I’m doing.
What’s more, I am 100 per cent convinced I could follow up that performance by complimenting my executives on a superb performance, and jacking up their compensation levels another 50 per cent. In fact, I could do it by lunch and give them the rest of the day off. And, unlike so many others on the board of directors, I’m not even related to the Beaudoin or Bombardier families.
Seriously, folks, this is not one of those cases in which skilled corporate executives are unfairly dragged over the coals for receiving compensation that accurately mirrors their skills but upsets the rabble. When Hunter Harrison quit Canadian Pacific Railway Ltd. five months early so he could join CSX Corp. at a pay level equal to half the gross national product, CSX practically sent out a welcoming committee to strew flowers in his path, because they figured he’s worth it. Based on his record, he’s likely to run a better company and make everyone richer.
At Bombardier, that’s not the case. As Corcoran notes, “Bombardier’s board of directors sets executive compensation, and according to Jean Monty, head of the board’s human resources committee, company bonuses and share incentives offered to Bellemare and others are in line with industry practice.”
Hmmm. Thing is, the board of directors at Bombardier is so full of Beaudoin relatives that its board of governance prints a special page outlining the web of relationships. Jean-Louis Fontaine, for instance, is brother-in-law of Laurent Beaudoin (who is husband to Claire Bombardier), uncle of Pierre Beaudoin (who is son of Lauren Beaudoin, and husband of Huguette Bombardier Fontaine “who, through holding corporations which she controls, holds (with Mr. J.R. André Bombardier, Ms. Claire Bombardier Beaudoin and Ms. Janine Bombardier) a sufficient number of the voting rights attached to all issued and outstanding voting shares of Bombardier to affect materially the control of Bombardier.”)
To presume the human resources committee can remain wholly objective when considering whether to top up next year’s income for all those Beaudoin-Bombardier aunts, uncles, brothers and sisters, husbands and wives requires a leap of faith akin to believing that Prime Minister Justin Trudeau actually cares about the size of the federal deficit.
In an allusion I’m not sure I understand, Corcoran refers to the release last week of Ontario’s Sunshine List, which reveals which public employees earned more than $100,000 last year. As he points out, the list is “an envybased ideologically-driven report that serves only to increase salaries as employees demand equalizing compensation.” It’s also a chance for Ontarians to put precise numbers on just how generously their government lavishes tax dollars on public employees, and the widening gap between what ordinary people earn from the private sector, and the bonanza they can expect if they’re able to wheedle their way onto the public payroll.
Too many corporate boards employ the same scam to justify everescalating pay levels. If Larry over at Struggling Canadian Aerospace Corp. manages to squeeze a fat pay packet out of his somnolent board of crony directors, Charles at Barely Keeping Its Head Above Water Inc. can demand an equal deal on the basis that Larry has set the market rate for underperforming executives. This comes as great news to Bernadette, CEO of Failing Fast Ltd., who has the added argument that — as a genderappropriate female executive — she deserves an extra fillip to help her break the glass ceiling.
Sure, the shareholders could complain if they wanted, but since the shares are structured to maintain control in a few hands, all related to one another via family or friendship, who gives a hoot? Meanwhile, politicians take one look at what’s going on and call a press conference to explain that the CEO at the local power utility — the one that still bills cottagers for delivery charges when the power is turned off all winter — fully deserves to earn 50 times the entrylevel Sunshine List salary because the province needs to attract “the best and the brightest.”
Could someone else do the job? Well, sure … if discipline, wisdom and rare talent are required to run a big corporation, after all, who’s been running Trump Inc.? Corcoran concludes, “What Trudeau and Bombardier’s critics should know — must know — is that if the company is to succeed it needs to pay its executives properly.”
OK, fine, but so far Bombardier has mainly demonstrated the many ways it has found to underperform, disappoint and fail. Lousy executives are no different than lousy politicians, and no more deserving of reward for their failures.