Bloomberg
Bombardier should reconsider the bonuses it awarded top executives after taxpayers helped underwrite the company’s recovery, Quebec Finance Minister Carlos Leitao said.
“People are shocked, and I’m shocked” at the compensation, Leitao told Quebec’s TVA television network Friday.
Compensation for Bombardier’s six highest-paid executives jumped almost 50 percent last year to about $32.7 million, Montreal-based Bombardier said March 29 in a regulatory filing. Chief Executive Officer Alain Bellemare — who’s been leading a five-year turnaround plan that includes more than 14,000 job cuts — saw his compensation climb 48 percent to $9.5 million, including a $2.4 million bonus.
“My colleagues in cabinet are shocked because it’s out of proportion,” Leitao said. “The company is trying to restructure itself, very well, but it’s shocking to see such bonuses.”
Quebec has invested $1 billion in Bombardier’s C Series jet program, which entered service more than two years late and billions of dollars over budget. The all-new aircraft won a critical lifeline last year with a $5.6 billion order from Delta Air Lines Inc., and the airline’s top executive cited the provincial government’s support as a key reason behind his April decision to buy at least 75 of the jets.
Bombardier’s widely traded Class B shares gained 62 percent in Toronto trading last year, buoyed in part by the Delta order and another from Air Canada. That followed a 68 percent decline in 2015, the year that the company hired Bellemare.
Last month, Canada’s federal government agreed to provide C$372.5 million ($280 million) in support for the C Series and the Global 7000 business jet program after more than a year of discussions. The federal assistance gave Bombardier an additional cushion — while falling far short of the $1 billion in aid the company had initially sought.
Simon Letendre, a Bombardier spokesman, didn’t immediately respond to a request for a statement on Leitao’s comments. In its filing, the company said its compensation practices “are aligned with Bombardier’s performance in light of applicable circumstances and reflect competitive market practices.”
News of the Bombardier executive pay increases has generated considerable media coverage in Quebec, with many commentators criticizing what they called the unfairness of the bonuses in light of taxpayer support. Besides Quebec’s investment in the C Series, Bombardier also received a $1.5 billion cash injection from Caisse de Depot et Placement du Quebec, the provincially owned pension fund manager.
Directors of Bombardier should be mindful of the company’s status as a Quebec industrial icon, Leitao said.
“Bombardier is a company that has a special place in the Quebec psyche,” Leitao said. “It’s a company unlike any other. I’m urging the board to rethink the compensation policy. I’m inviting them to review all this even before the next board meeting.”
Noting the company’s turnaround is under way but not yet complete, the finance minister added: “Let’s wait until we congratulate ourselves over this success.”
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