After years of costly stumbles, Bombardier finally seems to be moving in the right direction, especially since the hiring of Alain Bellemare as chief executive in February 2015.
So it might seem an odd moment for institutional investors to insist on the removal of Pierre Beaudoin, a grandson of the company’s founder, as executive chairman.
But Beaudoin picked a bad time to propose hiking the leadership team’s compensation by about 50%. A company in Bombardier’s position needs to attract and retain top executive talent, but a pay rise of that scale, while the company takes in more than $2.7 billion from Canadian taxpayers and lays off thousands of employees, looks greedy.
The move to reduce Beaudoin’s role is arguably overdue. The dynamics of the aerospace industry tend to be unkind to family dynasties. Pierre Beaudoin’s father, Laurent, built the then snowmobile manufacturer into a global rail and aviation giant. But his son’s legacy so far is defined by the mis-steps of the CSeries and the cancelled Learjet 85 business jet.
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. Beaudoin’s role may be diminished, but the families’ grip on the company remains firm.