(Bloomberg) -- Bombardier Inc. will delay paying more than half of last year's compensation for top executives, responding to protests after increasing payouts despite receiving government aid and planning mass job cuts.
“I understand the reaction of Quebeckers,” Chief Executive Officer Alain Bellemare said on Ici Radio-Canada radio Monday morning. “I heard, I'm listening, and it's important for us because we have close links with Quebeckers and we want to preserve them.”
Payments will be delayed by one year to 2020 for six of the highest-paid executives, the Montreal-based company said in a statement Sunday night. The deferred amounts will only be payable if Bombardier achieves its performance objectives.
Executive payouts at the company stoked public anger in its home province as the maker of planes and trains boosted 2016 compensation almost 50 percent after benefiting from taxpayer aid and announcing plans to eliminate more than 14,000 jobs. Quebec last year invested $1 billion in Bombardier's C Series jetliner program, which entered service more than two years late and billions of dollars over budget.
‘Scandalous Move'
Quebec Premier Philippe Couillard took to Twitter on Sunday night to say he was “satisfied” with Bombardier's decision to defer compensation. Opposition leader Jean-Francois Lisee called the move “scandalous” and asked for the bonuses to be canceled.
Bellemare said he received a call from Couillard on Sunday about the compensation, “which encouraged me to go faster. We've learned a big lesson here,” the CEO said on RDI television.
He defended the compensation plan, saying the leadership team ushered its new C Series jetliner into service last year, won key orders for the plane from Delta Air Lines Inc. and Air Canada, supervised the first flight of the Global 7000 business jet and helped strengthen the company's finances. About $16 million in total compensation will be postponed until 2020, he told Ici Radio-Canada.
Sixty percent of Bellemare's 2016 compensation won't be payable before 2020, “and that's a lot,” the CEO said in a separate interview on Montreal's 98.5 FM radio. His compensation is in line with that of other CEOs in the industry, he said.
“If we perform, not only will the executives benefit, but Quebec will benefit, our employees will benefit, and we'll be capable of continuing to create jobs here,” Bellemare said. Details of the plan will be filed this week as a supplement to Bombardier's 2017 Management Proxy Circular.
Quebec Jobs
The payments deferral is “important for the workers and the population of Quebec,” Premier Couillard tweeted in French. About one-third of the jobs Bombardier is set to eliminate by 2018 are in Quebec. That means about 5,000 people in the province will be affected.
Bombardier's disclosure last week of the pay increases prompted Quebec Finance Minister Carlos Leitao to express shock at the payouts. He also urged the company's board to rethink the compensation policy, a call that was echoed by Government House Leader Jean-Marc Fournier.
Hundreds of people gathered Sunday in front of the company's downtown Montreal headquarters to demonstrate against the payouts, with some chanting, “Shame on Bombardier.”
While Executive Chairman Pierre Beaudoin on March 31 offered to forfeit his pay gain, Bombardier initially declined to comment on whether Bellemare, who replaced Beaudoin as CEO in February 2015, and other senior managers would also give up pay increases.
Ninety-three percent of respondents in a Leger Marketing online poll published Sunday by the Journal de Montreal said they disagreed with Bombardier's decision to boost the compensation of senior executives. Eighty-four percent also said Quebec should review its support for the company. Leger polled 501 Quebec residents Friday and Saturday, and results are considered to be accurate to within 4.4 percentage points, 19 times out of 20.
Bombardier's five-year turnaround plan aims to reach break-even cash-flow in 2018 and $25 billion of annual revenue by 2020. The company posted a $981 million net loss last year, its second consecutive year in the red. Revenue dropped for two consecutive years, falling to $16.3 billion in 2016.
To contact the reporter on this story: Frederic Tomesco in Montreal at tomesco@bloomberg.net.
To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson
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