Shareholders back Bombardier pay hikes
Chairman to lose ‘executive’ title but will continue to lead board of troubled company
DORVAL, QUE.— There were angry protesters outside a Bombardier hangar near the Montreal airport and a few frustrated shareholders inside, but not enough to block the approval of a controversial executive pay hike or a renewed mandate for the founding family of the aerospace and transportation firm.
At the company’s annual general meeting Thursday, 93 per cent of shareholders voted in favour of a salary and bonus plan for the executive team that will boost compensation by about 50 per cent, while 92 per cent supported a continued role for Pierre Beaudoin as chairman of Bombardier’s board of directors.
Bombardier has faced a tumultuous period in which criticisms of the company and its management practices have been coming from investors and politicians alike.
“You have to understand that Bombardier is a jewel in Quebec and Canada,” said Alain Bellemare, Bombardier’s president and chief executive. “It’s important for us to have all Quebecers and Canadians supporting our organization.”
The pride in Bombardier and its economic importance as a local employer justified the Quebec government’s decision to give the company a $1-billion bailout in 2015, followed by a federal loan valued at $372.5 million earlier this year.
But Bombardier “shot itself in the foot,” as one political critic in Quebec said Thursday, when it hatched a plan to boost executive compensation for Beaudoin, Bellemare and a few others. Public outrage forced them to restructure the proposed package so that the lion’s share of the bonuses will not come until 2020 and only if the company has had strong financial performance. Beaudoin also asked the board to cut his 2016 compensation by $1.9 million.
The justification was simple, Monty said. The company needed to be able to offer better incentives to attract and retain talent and compete with other leading multinational companies.
Hours before the shareholder meeting, the company appeared to bow to its critics in announcing that Beaudoin would give up his title as “executive chairman of the board” at the end of June, ending what the company said was a “transition period” to hand Bellemare full control of the company’s daily operations.
“It was an appropriate time to make the move, but I think it was accelerated by the situation,” Karl Moore, associate professor at McGill University’s faculty of management, said.
The “situation” was in fact a largescale revolt against the compensation plan and the continued role of the Beaudoin clan — which holds a majority of Bombardier’s shares — that was led by major institutional investors including the Ontario Teachers’ Pension Fund and Bombardier’s largest outside shareholder, the Caisse de dépôt et placement du Québec.
The Caisse de dépôt had pushed for an independent chairman. The wishes of the major pension funds were not heeded by the company or the majority of shareholders, but the concerns will be a factor as the company goes forward, Moore said.
“(The funds) own millions of their shares and they can buy more and they can absolutely influence their shareholders,” he said. “So I think they’re rethinking it with the move of Pierre Beaudoin from executive to chairman, but I think they’re going to have to look at the role of the family and the board as well.” With files from The Canadian Press and Bloomberg