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Bombardier under fire for $32.6M US given to executives while taking government cash

Friday - 31/03/2017 02:21
Payout comes after Quebec, Ottawa poured money into Montreal-based aerospace giant
Innovation Minister Navdeep Bains, (left), Bombardier President and CEO Alain Bellemare (centre) and Transport Minister Marc Garneau were on hand last month to announce a $372.5 million in federal loans for the Global 7000 and CSeries airc
Innovation Minister Navdeep Bains, (left), Bombardier President and CEO Alain Bellemare (centre) and Transport Minister Marc Garneau were on hand last month to announce a $372.5 million in federal loans for the Global 7000 and CSeries airc

Bombardier is being slammed for its "sense of entitlement" after awarding $32.6 million US to senior executives even as it laid off thousands of workers and sought government aid.

The payout represents an increase of nearly 50 per cent for its top five executives and board chairman, compared with 2015.

"At the very least, it demonstrates a rather incredible sense of entitlement, doesn't it?," said David Baskin, president at Baskin Wealth Management, a Bay Street investment management firm.

"Here's a company that basically went begging to the province and the federal government for money, saying that if you don`t give us all this money, we're going to lay off all these workers."

 

The federal government issued a $372.5 million loan last month for the CSeries and Global 7000 programs, while the province recently poured $1 billion US into the CSeries program in exchange for a 49.5 per cent stake. 

The province's pension fund manager, the Caisse de dépôt, also bought a 30 per cent stake in the company's railway division for $1.5 billion US.

'Lack of judgment'

Baskin told CBC Montreal's Daybreak that, if he was the federal civil servant who negotiated the terms of the agreement with Bombardier, he would have said, "'Please don't embarrass us by raising your pay by 50 per cent after giving you all this money.' But I guess nobody thought of that."

The Montreal-based aerospace giant is in the midst of a multi-year plan that has involved mass layoffs as it tries to regain its financial footing. It has announced job cuts totalling 14,500 positions worldwide over the last two years.

The company cut its loss to $981 million US last year, down from $5.34 billion US in 2015 despite lower revenues.

 

BOMBARDIER-CSERIES/
A Bombardier worker walks past the CS300 Aircraft last year. The Montreal-based company secured loans from both the federal and provincial government to help with the roll-out of the CSeries jet. (Christinne Muschi/Reuters)

Last year, CEO Alain Bellemare got paid $9.5 million US, up from $6.4 million US a year earlier. His annual bonus almost doubled to $2.36 million US.

The chief financial officer and heads of business and commercial aircraft, meanwhile, each received more than $4 million US, while the head of the railway division's compensation increased 93 per cent to $4.7 million US.

Michel Nadeau, the head of Quebec's Institute for Governance of Private and Public Organizations, is also harshly critical of Bombardier. He went even further than Baskin, saying the executives' salary increases are unacceptable and should be reversed. 

"I think the Quebec premier and the president of the Caisse de dépôt should call Bombardier and say, 'you should cancel these salary increases.' I think it's a lack of judgment from the board of directors," Nadeau told CBC.

Bombardier declined a request for an interview, but said in a statement the executive compensation is consistent with what's seen at other companies.

Couillard defends investment

On Thursday, Quebec Premier Philippe Couillard tried to deflect questions about the payout, saying the company and its shareholders are ultimately the ones affected.

QUEBEC QUESTIONS 20170314
Quebec Premier Philippe Couillard said the province's investment in Bombardier is specific to the CSeries jet. (Jacques Boissinot/Canadian Press)

He said the province's investment is protected because it's directed specifically towards the CSeries jet. 

"This is an example that really says to the public and taxpayers, essentially, why we needed to focus and segment our focus on CSeries," he said. 

"The opposition asked us why we didn't invest in the company [as a whole]. You have the answer this morning."

Source: CBC News:

 Key: Bombardier

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