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Then-president and CEO of Bombardier Alain Bellemare, now under fire for his severance package of US$12.35-million in March 2020, attends a press conference in this file photo from June 17, 2015.ERIC PIERMONT/AFP/Getty Images

Major Bombardier Inc. shareholder and supporter Caisse de dépôt et placement du Québec is voting against the company’s executive pay practices at its coming shareholder meeting.

It’s one of a number of major North American pension plans that intend to rebuff Bombardier’s compensation program. Some, including the Caisse, have grown sufficiently discontented to oppose reappointing directors to the company’s board.

Bombardier, like most major Canadian companies, submits its compensation program to shareholders for a non-binding “say-on-pay” vote at its annual meeting. Canada Pension Plan Investment Board (CPPIB), British Columbia Investment Management Corp. (BCI), as well as two major pensions from California and one from Florida, also say they are voting “no” Thursday.

At issue this year is Bombardier paying former chief executive Alain Bellemare a severance package of US$12.35-million when he was terminated in March, as well as promised future special payments and potential severance packages to other top executives when a deal to sell the company’s train division closes in 2021.

Spokeswoman Jessica McDonald said Tuesday the deal is “transformational and strategic for Bombardier’s future,” and the board’s responsibility is to ensure the transaction is successfully completed – which requires retaining key personnel in a period of uncertainty.

However, proxy adviser Glass Lewis & Co. recommended a “no” vote on the company’s say-on-pay measure, while Institutional Shareholder Services Inc. backed the company with a “yes” recommendation. Neither adviser recommended shareholders withhold votes from the company’s directors. (In electing corporate boards, shareholders do not have a choice to say “yes” or “no” to individual directors. Instead, they typically must vote in favour of a director or “withhold” the vote.)

Glass Lewis said the “significant entitlements” for the executives “are a considerable jump from previous arrangements. ... When considered alongside the significant, expanded actual severance benefits for Mr. Bellemare despite the company’s performance during his tenure, we believe that the company’s pay practices warrant serious concern and a vote against this proposal."

Most companies win say-on-pay votes handily, with the typical member of the S&P/TSX 60 garnering approval from 90 per cent or more of shareholders, according to a review of data by The Globe and Mail. And Bombardier is certain to win this one: The company’s founding family owns a class of shares that gives it about 60 per cent of the total vote.

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The disclosure of voting intentions by the pension funds, however, suggests Bombardier is in for some unpleasant feedback.

The Caisse, which declined to comment for this story, owned 47 million Bombardier shares, or about 2 per cent of the company, as of its most recent disclosures. The Caisse will vote “no” on say-on-pay and withhold votes from the three directors who serve on Bombardier’s compensation committee, including chair Vikram Pandit, a former Citigroup CEO who is also Bombardier’s lead independent director.

In an explanation, the Caisse said a portion of Mr. Bellemare’s severance that was based on the successful completion of the Transportation division sale was largely beyond what was established for in his contract when he was hired. The Caisse also said the special packages for the other executives are “excessive.” It’s withholding votes for the compensation committee directors for approving the changes, it said.

The California Public Employees’ Retirement System, or CalPERS, will vote the same way as the Caisse, withholding from the compensation committee members. The California State Teachers’ Retirement System, or CalSTRS, says it will vote “no” on say-on-pay and also withhold votes from Bombardier’s entire board of directors.

The two California funds have outsize influence in governance matters, in part because of their massive size: CalPERS, with US$350-billion in assets, is bigger than CPPIB, and CalSTRS, at about US$250-billion in assets, also ranks among the world’s biggest plans.

CPPIB, in addition to voting “no” on say-on-pay, will withhold its votes for director Douglas Oberhelman, who sits on the compensation committee and also chairs the committee that oversees Bombardier’s governance.

BCI is supplementing its say-on-pay “no” vote by withholding votes from five directors, including all four non-independent directors, as “the board’s overall independence level does not meet our guidelines.” BCI says it’s withholding votes from Mr. Oberhelman because he “miss[ed] more than 25 per cent of scheduled meetings without a satisfactory reason.”

The State Board of Administration of Florida, which runs that state’s major plan, has also said it will vote “no” on say-on-pay, but will cast its votes for Bombardier’s directors.

How many shares the plans hold right now is unclear, as public disclosures lag. At one time or another in the past two years, CPPIB, CalPERS and BCI had share holdings in the millions, but there are more than two billion Class B Bombardier shares outstanding.

None of the U.S. plans responded to requests for comment Tuesday afternoon, while CPPIB and BCI declined to comment.

Bombardier’s Ms. McDonald said: “Shareholders have been generally supporting Bombardier’s compensation practice, by an average of 97 per cent over the last three years,” she said. “While we respect Pension funds and Glass Lewis’ opinion, they own a very small portion of Bombardier shares.”

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