Bombardier Inc. Executive Chairman Pierre Beaudoin offered to forfeit a pay increase for 2016, responding to a firestorm of criticism that prompted Quebec's finance minister to call for Canada's biggest aerospace company to review its compensation practices.
"After listening to the recent public debate about the compensation of senior executives at Bombardier, I have asked the board of directors to reset my 2016 compensation, reducing it to the 2015 level," Beaudoin said in a statement late Friday. "It is clear that this situation has become a distraction to the important work done by our employees and senior management to return this great company to growth."
Executive payouts at Bombardier have generated public anger as the maker of planes and trains boosted compensation almost 50 percent after receiving taxpayer aid and announcing plans to cut more than 14,000 jobs. Quebec has invested $1 billion in Bombardier's C Series jetliner program, which entered service more than two years late and billions of dollars over budget.
Beaudoin, whose family controls the Montreal-based company via a majority of the multiple voting shares, made $5.3 million last year -- a 37 percent increase from his $3.8 million in 2015. He was part of a group of six senior Bombardier executives whose combined compensation jumped in 2016 to about $32.7 million. Simon Letendre, a Bombardier spokesman, declined to comment Saturday when asked via email whether any other executives would follow Beaudoin's lead.
"People are shocked, and I'm shocked" at the payouts, Quebec Finance Minister Carlos Leitao told the TVA television network in an interview Friday. "I'm urging the board to rethink the compensation policy. I'm inviting them to review all this even before the next board meeting."
Jean Monty, who heads Bombardier's compensation committee, defended the company's practices as "sound" and "fully and appropriately aligned with value creation." They "reflect the global nature of the business and our need to attract and retain the very best Canadian and global talents," he said.
More than half of the executive pay for 2016 "is conditioned on the company delivering improved performance for at least the next three years," Monty said in a letter posted to Bombardier's website Saturday. If the company doesn't perform and the stock price doesn't increase, "this money will never be paid."
Three-quarters of the compensation of Bombardier's senior executives isn't guaranteed, Monty added. Rather, he said, the payout is based on achieving specific targets -- about 22 percent for short-term goals and 53 percent for long-term objectives.
Bombardier's widely traded Class B shares fell 2.4 percent to C$2.04 at the close of trading Friday in Toronto. The stock advanced 62 percent last year, more than tripling the gain of Canada's benchmark S&P/TSX Composite Index. Last year's increase followed a 68 percent plunge in 2015, the year the company hired Alain Bellemare as CEO.
Bellemare, who's spearheading a five-year turnaround plan, saw his compensation climb 48 percent to $9.5 million, including a $2.4 million bonus. Under his watch, Bombardier landed a critical lifeline for the C Series with a $5.6 billion order from Delta Air Lines Inc. last year. The airline's CEO, Ed Bastian, cited Quebec's support as a key reason behind his decision to buy at least 75 of the jets. Bombardier also won a major order from Air Canada.
A pay raise of the magnitude at Bombardier "is pretty excessive," said John Stephenson, chief executive officer of Stephenson & Co. Capital Management, who sold his Bombardier holdings earlier this year. "It's an issue when you are at the public trough and the public really isn't getting their money's worth. It stretches credibility. It's a continuation of the theme of entitlement."
All six senior executives listed in a March 29 filing joined Bombardier or assumed new positions at various times between February and December 2015, meaning that their compensation numbers reflected a partial year, Monty said in his letter. Directly comparing 2016 with 2015 pay is therefore "inappropriate and misleading," he said.
Before being made executive chairman, Beaudoin served as Bombardier's CEO. He relinquished the role in February 2015 when Bombardier hired Bellemare.
Leitao, who said Bombardier occupies a "special place in the Quebec psyche," said the company's turnaround is underway but not yet complete. Bombardier forecasts that the C Series program won't become cash-flow neutral before 2020.
"Let's wait until we congratulate ourselves over this success," he said. "The company is trying to restructure itself, very well, but it's shocking to see such bonuses."
Last month, Canada's federal government agreed to provide C$372.5 million ($280 million) in support for the C Series and the Global 7000 business jet program after more than a year of discussions. The federal assistance gave Bombardier an additional cushion, while falling far short of the $1 billion in aid the company had initially sought.