Quebec’s pension fund manager has called for replacing Pierre Beaudoin as executive chairman of Bombardier with an independent director and voted against a controversial plan for executive compensation.
The move by Caisse de depot et placement du Quebec (CPDQ), which invested $1.5 billion in Bombardier’s rail division in November 2015, stirs more controversy as the aircraft manufacturer prepares to host its annual general meeting of shareholders on 11 May.
In a letter sent on 8 May to Bombardier principal vice-president Daniel Desjardis, CPDQ complained about the company’s leadership.
In early April, a Bombardier proposal to raise compensation for six executives by as much as 50% created a public backlash, with provincial ministers criticizing the proposal and protests staged outside Bombardier’s offices outside Montreal.
The proposal was announced only months after Quebec taxpayers invested $2.5 billion in Bombardier, including a $1 billion cash injection by Invetissement Quebec in a new joint venture to the manage the CSeries aircraft programme. The additional cash from taxpayers was needed to keep Bombardier afloat after losings billions in development projects for the CSeries and the cancelled Learjet 85 business jet.
Bombardier responded to the backlash by amending the proposal to defer the compensation increases until the company reaches certain financial recovery targets. To CPDQ, however, the initial proposal caused grave concerns about Bombardier’s decision-making.
“Our concern is that the initial decisions were made in the first place and what that reflects about the governance of the company,” wrote Kim Thomassin, executive vice-president for legal affairs and secretariat of CPDQ. “This is especially true for the compensation that the Board plans to pay the Executive Chair.”
The pension fund manager also admonishes Bombardier’s board to “better appreciate and better balance the breadth of the interests of its various stakeholders,” the letter states. “As one step in enabling the Board to play this critically important role and hence, to move toward substantively better governance, in our view Bombardier’s Board should be chaired by a fully independent director.”
CPDQ remains supportive of chief executive Alain Bellemare and his management team, which in November outlined a five-year financial recovery plan that continues on track.
But the government-owned pension fund now is now pushing for an unprecedented shake-up at the top of the company. Joseph-Armand Bombardier founded the company as a snowmobile manufacturer 1959. After his death in 1964, his son-in-law, Laurent Beaudoin, took over the company and diversified it into a train and aircraft manufacturer. Laurent stepped down as chairman in February 2015, after Bombardier acknowledged losing billions on CSeries development and Learjet 85 cancellation costs. His son, Pierre Beaudoin, succeeded him as chairman, but was responsible for many of the costly decisions as the former CEO.
Source: Cirium Dashboard