Bombardier Inc. said Chairman Pierre Beaudoin will relinquish executive duties while continuing to lead the board, partly bowing to a public uproar over pay practices after major investors withheld support for his re-election.
Bombardier’s original plan was to award Beaudoin and its top five executives compensation hikes of almost 50 per cent. Beaudoin later renounced the increases while other executives postponed the compensation plan by a year until 2020 after the company faced an outpouring of anger that included protests outside the company’s Montreal headquarters. Beaudoin took over as CEO in 2008 from his father, Laurent Beaudoin, son-in-law of the company’s founder, Joseph-Armand Bombardier.
Beaudoin, Bombardier’s former chief executive, was named executive chairman to assist current Chief Executive Officer Alain Bellemare’s transition into his new job in 2015.
Bombardier said Beaudoin will continue to stand for re-election, but would not comment until the matter is discussed at the meeting.
The company says it expects that change will be formally approved by Bombardier’s board of directors following today’s annual general meeting – which is expected to be the focus of public protests and shareholder displeasure.
Beaudoin agreed to forgo the pay hike and other executives agreed to defer.
The shareholder vote is only advisory and non-binding, but can be used to send a powerful signal. They also opposed Bombardier’s executive compensation plan and withdrew support for several director nominees, though all of them were elected to the board.
The federal assistance gave Bombardier an additional cushion, while falling far short of the $1 billion in aid the company had initially sought.
Mr. Beaudoin is part of Bombardier’s founding family, which controls 53 per cent of the company’s voting power despite only a 13-per-cent equity stake.
Beaudoin later renounced the increases while other executives postponed the compensation plan by a year until 2020.
“Without wanting to defend Pierre Beaudoin, I find that these last days he serves as scapegoat”, said David Chartrand, Quebec co-ordinator of the International Association of Machinists and Aerospace Workers. Bombardier has said the company complies with the laws and regulations in countries where it operates. The amount he receives will be decided by the board.
The company’s order intake in the business rose 83.3 percent to $2.2 billion in the three months ended March 31.
The announcement of Beaudoin relinquishing his executive role came as the company reported a first-quarter net loss of US$31 million, or two cents per share, an improvement from US$138 million, or seven cents per share, at the same time past year.
By demoting Pierre Beaudoin to non-executive chairman, Bombardier’s governance structure moves closer to the norm, with one exception: the Bombardier and Beaudoin families still control the majority of Class A shares.