Caisse withholds support for Bombardier chairman
Fund votes against payouts for execs, urges board of directors to improve
Caisse de dépôt et placement du Québec has withheld support for Bombardier Inc. chairman Pierre Beaudoin and voted against the compensation of its executives, which had led to public outrage last month.
The shift in support comes before Bombardier’s annual shareholder meeting on Thursday, where stakeholders will vote on the controversial remuneration for members of its executive team.
In a letter, signed by Kim Thomassin, the Quebec pension fund’s vice-president of legal affairs, the fund said that “the Board of Directors of Bombardier must improve if the Company is to deliver its plan and realize its potential.”
“In our view, the Board’s recent decisions regarding executive compensation fall short of the necessary standard of stewardship,” the letter said.
Bombardier was the target of public anger after it was discovered that six executives were in line for a roughly 50 per cent increase in compensation, a few months after the federal government announced it would provide the firm with a $372.5 million loan.
After a wave of criticism, including some protests, Bombardier’s chief executive Alain Bellemare asked the board to delay payment of more than half of last year’s total planned compensation to 2020.
While the Bombardier board was commended for delaying payments to the executive members, the Caisse said “our concern is that the initial decisions were made in the first place and what that reflects about the governance of the company.”
“Given this lapse of governance, we have voted against the advisory resolution on compensation.”
The letter also says improving Bombardier’s governance goes beyond the issue of compensation, and that the board should be chaired by an independent director.
“Consistent with our view of the importance of an independent Chair for this Company, we have withheld our support for the reelection of the Executive Chair.”
Quebec’s pension fund invested US$1.5-billion in Bombardier in exchange for a minority stake in the company ’s train-making business. Under the deal, the Caisse acquired a 30 per cent equity stake in a holding company that owns the transportation division’s assets.