CPPIB, ALBERTA FUND ADD TO HEAT ON BOMBARDIER.
Canada Pension Plan Investment Board and Alberta Investment Management Corp. have become the latest to come out against the reelection of Bombardier Inc.’ s executive chairman Pierre Beaudoin and the company’s executive compensation package.
CPPIB, The country’s largest pension fund manager said on its website Wednesday it would withhold its vote for Beaudoin and two other directors as well as the pay package. Shareholders are to vote on the plan at the annual meeting on Thursday.
AIMCo said it will withhold its vote f r om f i ve non- independent directors excluding CEO Alain Bellemare and members of the compensation committee.
It will also vote against the so- called compensation resolution “due to a significant disconnect between pay and performance,” said spokesman Denes Nemeth.
“Our assessment of recent events confirms the need for independent board leadership,” Ontario Teachers said in a statement Tuesday. “We typically do not support boards installing an individual in the role of executive chair.”
Teachers said it was voting against the executive compensation package because the company failed to adequately explain the linkage between its targets and pay. “The resulting linkage between pay and performance is not sufficiently justified,” Teachers said.
BCIMC not only withheld its vote for Beaudoin but eight other directors as well, including Pierre’s father Laurent Beaudoin, for various reasons including a lack of independence, attendance at meetings or other issues, it said on its website.
It also voted against the executive pay package, saying it believed there was little correlation between pay and performance. BCIMC owned roughly seven million shares in the company as of March 31, 2016, the most recent holdings it has reported.
The funds join the Caisse de dépôt et placement du Québec and Solidarity Fund QFL, which also withdrew support for Beaudoin and the compensation plan.
“The big pension funds are all piling on,” said Karl Moore, an associate professor at McGill University’s business school. “That’s put- ting enormous pressure on the board. It speaks loudly of their desire for change.”
“Governance and t he family is what this is about,” said David Tyerman, an analyst at Cormark Securities. “A lot of public money is involved, a lot of it has been raised under challenging circumstances. Investors aren’t very happy about the dualclass structure.”
The pay proposal fuelled outrage after Bombardier increased executive pay almost 50 per cent despite receiving taxpayer aid and announcing plans to cut more than 14,000 jobs. The Montrealbased maker of planes and trains later reduced Beaudoin’s pay and delayed some remuneration for leaders, including CEO Alain Bellemare.
While expressing “full support and confidence” in Bellemare and his team as they attempt to turn the company around, the Caisse in a letter to Bombardier on Monday said better governance is required to make the plan successful.
The Bombardier and Beaudoin families control the company by virtue of owning a majority of the Class A multiple- voting shares. Each Class A share carries 10 votes, compared with one each for the Class B stock. That’s likely to give the families the last word even if outside shareholders reject the compensation plan and withhold support from Beaudoin.
The vote will be held as Bellemare pushes a turna r o und pl a n after t he CSeries j etliner program championed by Beaudoin entered service more than two years late and $2-billion over budget.
Beaudoin, in a nine- year tenure as either CEO or chairman, earned about $53 million, according to data compiled by Bloomberg. Bombardier’s widely traded Class B shares tumbled 75 per cent in the period.
Major pension funds are opposing the re- election of Pierre Beaudoin as executive chair at Bombardier Inc.