Shareholders have killed Astral Media Inc.'s plan to give the company's outgoing chief executive officer a $25-million thank-you payment as part of the company's merger with BCE Inc. It marks the second time in a week that a major Canadian company has been embarrassed by a lack of support and forced to pull a proposal at the last minute.
While Astral investors overwhelming approved the $3-billion deal Thursday, which will see BCE inherit content it sees as necessary to increase its foothold in Quebec, the company also asked the shareholders to approve the bonus package for CEO Ian Greenberg as a way of thanking him for building the company and to compensate him for stepping aside when the deal closes.
But Astral was forced to pull the idea at the last minute after outraged shareholders indicated they would squash the proposal if it came to a vote. Astral could have moved ahead with its plan anyway, it said, but opted to spike the payment in the name of "good governance."
Astral will still proceed with the second part of the bonus plan, which will make $20-million available to key employees as part of a retention plan.
"We didn't receive sufficient support for the resolution to pass," spokesman Hugues Mousseau said. "[But]the bonus and retention plan aims to assist in retaining members of senior management and key company employees through the transition."
Last week, the Canadian Pacific Railway Ltd. board pulled the candidacies of seven directors, including that of CEO Fred Green and chairman John Cleghorn, in the face of overwhelming shareholder support for an alternative slate proposed by activist shareholder Bill Ackman.
BCE's deal still faces regulatory challenges that could force the company to sell some of its major-market radio stations, but was overwhelmingly supported by the Astral shareholders in a vote Thursday, despite opposition from some shareholders who felt the deal – which pays one class of shareholders more than another – was unfair.
BCE offered to pay $50 a share to holders of non-voting stock and $53.83 to holders of voting stock, primarily members of the founding Greenberg family. The Greenbergs also own a third class of 65,000 non-traded "special shares." BCE is paying $769.23 apiece for these, totalling $50-million.
The takeover passed with about 99 per cent approval across all share classes. It must now be approved by a Quebec court, in a hearing to take place Friday. The deal is likely to close near the end of the year.
"The company should not be so smug and believe that the 99-per-cent vote in favour vindicates their approach," said Jarislowsky Fraser president Len Racioppo, who has been a vocal critic of the deal's structure. "It does not. [We]did not dispute the valuation, but rather the makeup of the bid."
Astral operates 22 television services, including 13 in French, and has rights to properties such as HBO Canada and Canal Vie, Canal D and Family and Disney Junior. It also operates radio stations in 50 markets across the country.
BCE has been locked in heated competition with Quebecor Inc. and its television Vidéotron Ltée division. Both companies have been scrambling to upgrade networks and win subscribers, but the focus is shifting toward the exclusive content each company can offer.
"This transaction greatly increases the French-language content available from Bell and levels the competitive playing field with our major competitor in Quebec," said BCE chief executive officer George Cope.
With files from reporter Sean Silcoff in Ottawa