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Bombardier Inc. chief executive Alain Bellemare sold a majority of the securities he put into the company’s controversial automatic share-disposal program last fall, reaping total gains of $10.6-million on the transactions.

Insider-trading disclosures filed recently by the company show Mr. Bellemare exercised 52 per cent of the 7.04 million stock options he placed in the disposition program for a gain of $10.6-million last year. The shares were sold at an average share price of $4.55. Mr. Bellemare also received Bombardier Class B common shares when 565,611 of his restricted share units vested last year. Bombardier said the value of the restricted share units was $2.9-million at the vesting date, or $5.11 per share.

The disclosures show some other top executives disposed of even more of the securities they placed into the automatic disposition program, which was launched in September to allow senior officials to sell securities through an arm’s-length broker. Automatic share sales plans allow senior executives to exercise options and sell shares without running afoul of insider-trading regulations, which forbid executives from trading shares while they have material information that has not been disclosed to shareholders.

The public trading disclosures do not reveal the dates when the transactions took place, because securities regulators granted Bombardier an exemption to standard reporting requirements, allowing the company to disclose all transactions under the automatic securities-disposition program just once annually. All the trading activity was filed publicly using a Dec. 31 transaction date as a result.

A Bombardier spokesman on Thursday declined to comment on the transactions, including the exact timing of the sales.

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The timing is important because Bombardier faced criticisms last fall for launching a new executive share-disposition program prior to the release of bad news that sent its share price sharply lower.

The sales program was unveiled on Aug. 15, allowing executives to begin selling shares starting on Sept. 17. In early November, Bombardier announced plans for large job cuts and asset sales, and revealed its cash flow for 2018 would be worse than previously estimated. Bombardier’s share price plunged over several days as the news emerged, dropping almost 50 per cent between Nov. 7 and Nov. 16. Bombardier shares closed Thursday at $2.69 each.

Some observed that the share-sales program was launched before bad news was disclosed, but Bombardier said the program was created at a time when trading was permitted under its internal guidelines and under applicable securities laws.

Quebec’s securities regulator, the Autorité des marchés financiers (AMF), announced Nov. 15 that it would review transactions under the program, but has not yet released its findings. Bombardier suspended all securities sales under the program as of Nov. 15.

Mr. Bellemare said at an investor day in December that his share sales under the program represented "only a small portion” of his total long-term incentive awards, and he still held 80 per cent of the securities he had been granted under compensation programs.

“And on average, the same is true for the rest of the team," he said.

The disposition program allowed 12 senior executives to dispose of securities through an arm’s-length broker who makes the trading decisions. While the program was expected to run for two years, it appears several executives sold a majority of their securities within the first two months, which means their sales were not required to be spaced evenly over 24 months.

David Coleal, president of the business-aircraft division, exercised 82 per cent of the stock options he placed in the program for a gain of $10-million. He received Class B common shares last year when 260,181 of his restricted share units were converted at a vesting-date value of $1.3-million. Fred Cromer, who heads the commercial aircraft division, exercised 74 per cent of the options he put into the plan for a gain of $7.4-million. He also received common shares when 260,181 share units vested at a value of $1.3-million.

Under the arm’s-length program, executives were allowed to provide instructions about what they wanted to do with their securities when the program was launched, but could not dictate the exact timing of trades. Until the program was suspended on Nov. 15, executives also could not change their initial trading instructions.

The public filings show Bombardier chairman Pierre Beaudoin did not exercise any of the stock options he put into the program last year, but received Class B shares after 294,118 restricted share units were converted at a vesting-date value of $1.5-million.

Chief financial officer John Di Bert exercised 500,000 of the 4.36 million stock options he put into the plan, for a profit of $1.5-million, and received Class B shares after his restricted share units vested at a value of $2.4-million. The filings show former transportation division head Laurent Troger, who left the company in February, did not sell any securities under the program.

Editor’s note: (March 29, 2019) An earlier version of a Report on Business story on Friday said several Bombardier Inc. executives received payouts from their restricted share units in 2018, including a $2.9-million payment for chief executive officer Alain Bellemare when he cashed out 565,611 restricted share units. In fact, Mr. Bellemare received Bombardier Class B common shares at the vesting date of the share units rather than a cash payment. Other senior executives – including divisional president David Coleal, divisional president Fred Cromer, chairman Pierre Beaudoin and chief financial officer John Di Bert – also received Class B common shares rather than cash when their restricted share units vested in 2018.

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