The scion of Quebec's powerful Bombardier family is coming under scrutiny in his home province as outrage about executive pay at the Canadian plane and train maker lingers.
Pierre Beaudoin, whose family controls Montreal-based Bombardier, is coming under the microscope for some $5.2-million (U.S.) he was awarded in pay last year. That was up from $3.8-million the year before. Much of the compensation is tied to the future performance of the company's stock.
The sums are part of an overall 48-per-cent pay increase Bombardier awarded to its six senior executives in 2016, including Mr. Beaudoin. The compensation has drawn indignation across Canada, but especially in Quebec, where taxpayers made a $1-billion investment in the company's C Series program to prevent its collapse and save long-term jobs.
Observers argued that while there was some logic in Bombardier needing to pay well to retain the outside talent it recruited to fix the business, that logic applied far less to the executive chairman. Over his 7 years as CEO to February, 2015, Bombardier's market value sank significantly as the company grappled with cost overruns for its C Series jet and debt grew.
"It's nonsense that to be chairman of the board that Beaudoin would make $2-million, $3-million, $4-million, $5-million a year," Isabelle Dostaler, a professor in the department of management at Concordia University's John Molson School of Business, said in an interview Wednesday.
Ms. Dostaler is a critic of Mr. Beaudoin's pay hike, but sees some justification in the others.
"What the free market tells us is that if you want good managers, you have to pay for them," Ms. Dostaler said. "People that [they've] recruited could tomorrow morning find another job elsewhere in the world that would probably pay them even better. There's no doubt. Pierre Beaudoin, put him on the job market. Are you going to hire him? Not sure."
Exchanges on Bombardier remained heated in both Ottawa and Quebec City on Wednesday as opposition parties continued to press the governing federal and Quebec Liberals to demand Bombardier repeal the pay increases. The Conservatives said the Trudeau government should compel the company to cancel the raises as a condition of receiving the $372.5-million (Canadian) in loans Ottawa pledged to Bombardier in February. That deal has not been finalized.
Mr. Beaudoin became executive chairman of Bombardier in 2015 in a shift of power that saw him cede the chief executive role to newcomer Alain Bellemare under investor pressure. Many shareholders at the time had lost trust in the CEO as the company's situation failed to improve.
As the outrage grew last week over news of Bombardier's executive pay plan, the company announced on Friday that Mr. Beaudoin had renounced an increase in remuneration. "The trust and confidence of our people and our governments are extremely important to the company and to me," he said in a statement. "I take this step to put the focus back on what matters – the transformation of Bombardier into the most competitive plane and train maker in the world."
Five days later, the focus remained on Mr. Beaudoin.
"It's not for Quebec taxpayers to pay for Pierre Beaudoin's pay raises. It makes no sense," Coalition Avenir Québec Leader François Legault said in Quebec City. He said the remuneration was excessive compared to what Mr. Beaudoin's counterparts at Boeing and Airbus are paid and given Bombardier's recent financial difficulties.
Mr. Beaudoin's position as executive chairman is not directly comparable to a lead director or chairman position at other companies, said Bombardier spokesman Simon Letendre. In addition to managing the board, Mr. Beaudoin also oversees company strategy together with the CEO and is deeply involved with its sales teams, Mr. Letendre said, travelling extensively to represent the company at various meetings and events.
According to an analysis of some 250 S&P 500 companies published in March, 2016, by consultancy Mercer, compensation for executive chairmen is similar to that of other senior executives. Median total compensation was $6.6-million (U.S.) for people in that role in 2014, Mercer said.
For many investors, the founding family's power over Bombardier remains a stumbling block to better governance and an obstacle limiting shareholder interest in the company. The family controls a majority of the voting rights through a special class of supervoting shares despite owning only a fraction of the equity.
Backers of that dual-class share system say it shields the plane maker from a hostile takeover that could wipe out its industrial base in Canada and elsewhere. Others believe it has served more to shield a tight-knit group of people, including the family and some board members, from greater scrutiny.
"It's time we open up" the board a little, Ms. Dostaler said. "The people of Canada, not just Quebec, should feel very attached to this company and should want to keep it here in Canada. Well then, give us some room on the board."