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A man holds up signs during a demonstration outside Bombardier's head office in Montreal, Sunday, April 2, 2017, to protest recent pay hikes and bonuses to the company's top executives. (Graham Hughes/THE CANADIAN PRESS)
A man holds up signs during a demonstration outside Bombardier's head office in Montreal, Sunday, April 2, 2017, to protest recent pay hikes and bonuses to the company's top executives. (Graham Hughes/THE CANADIAN PRESS)

Widespread anger clouds Bombardier’s backtrack on executive pay Add to ...

Bombardier Inc. chief executive Alain Bellemare is trying to defuse public outrage over company plans to increase the pay of senior management after the plane maker received government aid and announced thousands of job cuts.

But Opposition parties in Quebec and Ottawa, in addition to a shareholders-rights group, all said Monday that Bombardier’s solution to the crisis – delaying half of last year’s planned compensation for its six top-paid executives an extra year until 2020 – does not go far enough.

In the House of Commons Monday, Prime Minister Justin Trudeau said his government was “not pleased” with Bombardier’s decision to hike executive compensation even as it is laying off workers, but was happy to see the company moving to defer some of the pay.

Read more: Bombardier delays most executive pay hikes amid rise in public anger

The Opposition Conservatives, meanwhile, called on the Liberals to compel the Montreal-based company to suspend the pay increases until it repays all its outstanding loans from the Canadian and Quebec governments.

The federal Department of Innovation said Bombardier has repaid $591.6-million of the $1.3-billion in federal contributions it and its predecessor companies received from 1966 to 2008. In February, Ottawa announced it also would provide $372.5-million in repayable contributions for research and development for the new Global 7000 business jet and ongoing activities related to the development of the C Series.

Although Quebec’s governing Liberal Party, which invested $1-billion (U.S.) in the company’s C Series program last year, appears to be satisfied with the company’s response to the furor, the opposition Parti Québécois said it planned to table a motion in the legislature Tuesday asking Bombardier to forfeit the 2016 pay raises.

According to a Léger poll published Sunday, 90 per cent of Quebec respondents said Bombardier executives should renounce their salary increases outright.

“The heart of the problem hasn’t been resolved,” said Daniel Thouin, president of Montreal-based shareholder rights group Médac. “The compensation is deferred but it’s being maintained. In our opinion, nothing has really changed.”

“There is nothing to applaud here,” said Amir Khadir of the Québec Solidaire party. “Bombardier leaders seem incapable of understanding that what people are asking for is not to delay their bonuses, it’s to renounce them definitively.”

The storm over pay raises for Bombardier’s senior management presents another significant distraction for the plane maker at a time it is trying to win new aircraft orders and get back on track after three straight annual losses. It also threatens to play into future requests for public funding if political leaders grow more squeamish about backing the company.

In interviews with at least eight Montreal media outlets Sunday and Monday, Mr. Bellemare expressed regret for the way Bombardier handled the pay issue, saying the company simply underestimated the potential for public blowback to the remuneration plan and should have better communicated the details. On the merit of the pay itself, however, he said the company’s compensation policy has been an essential tool allowing him to recruit some of the world’s top executives to his team.

“I understand the frustration of the people” who thought we were getting all this money right away, Mr. Bellemare told The Globe and Mail. “That’s not the case.”

Bombardier’s compensation for senior management is largely based on a policy of meeting future performance targets, he said. In extending a majority of the payouts by an extra year, the executives aren’t seeing their compensation vest as quicky as before, he said, something they nevertheless agreed to.

“I want to do what’s right for the business,” Mr. Bellemare said. “And for me to do this, I need to have the best possible team. I cannot do my job with B or C players. I need A players. And the support I received from the board, from the [human-resources and compensation] committee, is exactly that. They are giving me the right tools to do the job. And my job, when I do my job well, it’s for the benefit of Bomabardier but also for the benefit of Canada, Quebec and all of our employees.”

The company sparked widespread scorn in Quebec with a plan filed with regulators last Wednesday to increase 2016 compensation for its senior executives by nearly 50 per cent to a total of $32.6-million (U.S.) It was the most the plane maker has collectively paid senior management in at least three years.

Resentment centred on the fact the company was awarding the pay increases after receiving $1-billion in taxpayer funding from the Quebec government for its C Series program and announcing plans last year to cut about 14,000 jobs, including some 5,000 in Quebec. Ministers in the Couillard government said they were shocked at the payouts and said the company should reflect on the message it is sending.

As public criticism increased, Pierre Beaudoin, Bombardier executive chairman, sent out a news release Friday night offering to renounce his pay increase, worth $1.5- million. His family controls the plane and train maker through a special class of multivoting shares.

On Saturday, Jean Monty, a Bombardier director and head of its compensation committee, defended the pay levels in a letter, which appeared in The Globe and Mail on Monday, calling them “fully and appropriately aligned with value creation.” More than half the compensation for 2016 was conditional on the company delivering improved performance for the next three years through 2019, Mr. Monty said. If the company does not perform, if it does not increase its share price, the money will never be paid, he said.

Late Sunday, Bombardier announced that Mr. Bellemare asked the board of directors to defer payment of more than 50 per cent of the planned 2016 compensation for the six senior executives. In effect, Bombardier is delaying the payouts by one year to 2020 instead of the 2019 timeline outlined in Mr. Monty’s letter. As previously planned, the pay is tied to specific performance goals.

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Also on The Globe and Mail

Trudeau defends Bombardier loan after executive pay hike (The Canadian Press)

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