Bombardier Inc (BBDb.TO) Executive Chairman Pierre Beaudoin is giving up management responsibilities after an outcry over compensation, but will continue to lead the board, the company said on Thursday as it reported better-than-expected quarterly results, sending its shares up about 10 per cent.
Earlier this week, institutional investors came out against the board's controversial compensation plan and withheld support for Beaudoin, a member of the Bombardier-Beaudoin family which maintains control of the company with a majority of voting shares through its dual class share structure. Beaudoin took over as CEO in 2008 from his father, Laurent Beaudoin, son-in-law of the company's founder, Joseph-Armand Bombardier. "They wanted Mr. Beaudoin leaving the chairmanship", said Michel Nadeau, executive director of the Montreal-based Institute for Private and Public Governance.
The Caisse, which has a 30 per cent stake in Bombardier's railway division, said the change for Pierre Beaudoin is a step in the right direction.
But Beaudoin said in a company statement early Thursday that he planned to continue working with the board as chairman.
The vote is only an advisory to Bombardier's board - shareholders can't vote against board nominees but they are able to formally withhold votes to express their displeasure.
Bombardier's original plan was to award Beaudoin and its top five executives compensation hikes of almost 50 per cent. Beaudoin later renounced the increases while other executives postponed the compensation plan by a year until 2020 after the company faced an outpouring of anger that included protests outside the company's Montreal headquarters.
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Amid growing public anger over the pay increases even as the company was forced ask federal and provincial assistance to bankroll its operations, Beaudoin was forced to renounce the increases and other executives postponed the compensation plan by a year until 2020. The founding family, which includes Beaudoin, controls 53 per cent of votes despite owning only 13 per cent of outstanding shares.
The funds join the Caisse de Depot et Placement du Quebec and Solidarity Fund QFL, which is backed by a labor union, that also withdrew support for Beaudoin and the compensation plan.
"Without wanting to defend Pierre Beaudoin, I find that these last days he serves as scapegoat", said David Chartrand, Quebec co-ordinator of the International Association of Machinists and Aerospace Workers. The amount he receives will be decided by the board.
For the three months to end of March, revenues fell 9 per cent to $3.576bn, far weaker than the $3.85bn that the market was expecting, amid sharp drops across its three aviation related businesses: business aircraft, commercial aircraft and aerostructures and engineering services.
Bombardier's first-quarter report says the company, which reports in US currency, had $3.58 billion revenue in the first quarter, a $31 million net loss or two cents per share and $2 million or adjusted earnings.
On the Toronto Stock Exchange, Bombardier's shares closed at $2.21, up 7.8 per cent.
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