Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you make the most of staying home.
Visit the hub

The compensation includes a nearly US$3.5-million payment to former CEO Alain Bellemare, seen here on May 2, 2019, linked to the sale of the company’s transportation division to French giant Alstom SA.

Graham Hughes/The Canadian Press

Bombardier Inc. paid former CEO Alain Bellemare a severance package of US$12.35-million when he was terminated in March, and has promised future special payments to other top executives when a deal to sell the company’s train division closes in 2021.

The compensation, disclosed in the company’s proxy circular to shareholders filed Friday afternoon, includes a nearly US$3.5-million payment to Mr. Bellemare linked to the sale of the company’s transportation division to French giant Alstom SA, which is scheduled to close in June, 2021. It also includes almost US$7-million in cash – equal to two years of salary and bonus – and early access to cash out stock options and share awards the company values at just less than US$2-million.

The package reflects special compensation arrangements Bombardier has struck with multiple executives, rewarding them for the agreed-upon sale of Bombardier Transportation to Alstom for net proceeds of US$6.4-billion. The deal, which will see Bombardier exit the manufacture of rail cars and focus on business aircraft, was widely seen as key to the cash-strapped company’s survival.

Story continues below advertisement

Bombardier says in its circular that in February its board approved “a one-time, special cash incentive compensation to a broad group of key employees at various levels of the organization” if the company can close a major transaction such as the Alstom sale.

The company’s top executives, Bombardier says, will get that “special transaction payment” equal to a year’s pay, plus their bonus targets. That would make the payments equal to about US$1.2-million for each of chief financial officer John Di Bert, aviation division president David Coleal and general counsel Steeve Robitaille, and nearly US$1.5-million for transportation president Danny Di Perna. Mr. Bellemare’s US$3.5-million special severance payment was designed to replace what he would have received as a transaction bonus.

The company says the board decided to approve the payments “to ensure that Bombardier’s ability to maintain its business and achieve an optimal outcome for its stakeholders would not be negatively affected by the loss of key personnel at various levels of the organization … and that relevant key personnel would be rewarded for their special contribution in the context of the transaction and compensated as appropriate for the additional efforts imposed by the process.” To get the payment, the executive must still be employed by Bombardier when the deal closes.

In addition, the board approved potential severance payments for the top executives similar in design to Mr. Bellemare’s, if they were to depart the company. They include two years’ salary and bonus, and early access to stock options and share awards they’d otherwise forfeit by leaving. The company estimates their value at nearly US$12-million in total for the four men, based on Bombardier’s May 6 closing price of 53 cents a share. The stock closed at 41 cents on Friday.

Bombardier says the board approved the severance plans on the recommendation of its human resources and compensation committee “after extensive consultation with an independent external compensation consultant and external legal counsel.”

One of the considerations, Bombardier says, was to have key executives motivated to successfully complete a transaction. They’re more likely to, Bombardier says, if “the uncertainties, risks and potentially disturbing circumstances regarding their own employment and/or employment duties are minimized.”

Bombardier shares have plummeted this year as COVID-19 has disrupted the broad economy and the airline industry in general. The company said on May 7 that it had negative free cash flow of US$1.6-billion in the first quarter, nearly twice the shortfall analysts were expecting, with the extra amount nearly all because of the pandemic.

Story continues below advertisement

That level of “cash burn” will repeat in the second quarter, executives said, but they expect the second half of the year would be break-even or positive on cash flow. Bombardier defines free cash flow as the money it generates from its operations minus the amount it spends on capital goods and other long-term assets it uses for its business.

In the first quarter, Bombardier negotiated a new investment of US$386-million in its train-car manufacturing division from provincial pension fund Caisse de dépôt et placement du Québec. New CEO Éric Martel said this provided "additional flexibility as we managed through the crisis.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies