DORVAL, Que. — Pierre Beaudoin is relinquishing his role as Bombardier’s executive chairman, marking the first time in 75 years that a member of the company’s founding family won’t be involved in the day-to-day operations of the plane and train maker.
Beaudoin, who became a focal point of public anger and shareholder frustration over the issue of executive compensation, will step down from the position as of June 30 but remain non-executive chairman of the board of directors. Alain Bellemare, who replaced Beaudoin as CEO in February 2015, will remain in place.
“The time has come for me to ask the board to proceed with this change to complete this transition started two years ago,” Beaudoin said at Bombardier’s annual general meeting as about 50 people protested outside.
The announcement followed a building torrent of shareholder dissatisfaction over the company’s leadership at the executive level.
Beaudoin’s father, who guided Bombardier for decades, said the change in his son’s role saddened him.
“It’s not an easy situation but I think his situation will normalize,” said Laurent Beaudoin, 78, adding he was particularly disappointed with the Caisse de depot, the Quebec pension fund manager that had publicly expressed its displeasure with Pierre.
Before the meeting, five of Canada’s largest pension fund managers including the Caisse and several large American institutional investors said they didn’t support Pierre Beaudoin’s re-election to the board. They also opposed Bombardier’s executive compensation plan and withdrew support for several director nominees, though all of them including Beaudoin were elected to the board and the compensation proposal passed.
The shareholder vote is only advisory and non-binding, but can be used to send a powerful signal. The founding family, which includes Beaudoin, controls 53 per cent of votes despite owning only 13 per cent of outstanding shares.
Bombardier (TSX:BBD.B) had proposed to award Beaudoin and its top five executives compensation hikes of nearly 50 per cent. Beaudoin later renounced the increases and other executives postponed the compensation plan by a year until 2020 after much outcry.
That came after the company received assistance from the federal and Quebec governments of more than US$1 billion over the past year.
The Caisse, which has a 30 per cent stake in Bombardier’s railway division, said the change for Pierre Beaudoin is a step in the right direction.
“That said, on the matter of principle, we continue to believe Bombardier needs an independent chair,” said spokesman Maxime Chagnon.
The union representing Bombardier employees in Montreal said Beaudoin’s move doesn’t resolve the core problem of exorbitant compensation for executives who led a company in need of public aid while issuing thousands of layoffs.
“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.
The response inside the meeting was more mixed. Some shareholders complained that the family’s grip over Bombardier has slowed the company’s progress, while others said they should continue to be deeply involved.
The change in Beaudoin’s role was one that had been discussed by the board for several months, said Jean Monty, head of Bombardier’s human resources and compensation committee.
Beaudoin’s compensation, which was US$3.85 million last year, will be substantially reduced once he becomes chairman, Monty said. The amount he receives will be decided by the board.
The announcement Thursday coincided with the release of first-quarter results that showed revenue was down nine per cent to US$3.58 billion for the three-month period ending March 31. Losses were US$31 million or two cents per share, down from US$138 million or seven cents per share.
On the Toronto Stock Exchange, Bombardier’s shares closed at $2.21, up 7.8 per cent.