UPDATE - 11:52 am ET: The Ontario Teachers' Pension Plan has joined several large institutional investors in voting against the re-election of Bombardier's executive chairman and the company's executive compensation plan.
The Toronto-based pension plan says it has concerns about the board's approach to compensation despite Bombardier's improving performance.
Teachers' is also withholding its vote for executive chairman Pierre Beaudoin, whose family controls the company through multiple-voting shares.
MONTREAL — Two of Quebec's largest institutional investors say they won't support the re-election of Bombardier executive chairman Pierre Beaudoin, dealing a fresh blow against the manufacturer's controlling family just ahead of its annual meeting Thursday.
In a letter posted on its website Monday, the Caisse de depot pension fund manager said it has also voted against Bombardier's plan to award Beaudoin and its top five executives compensation hikes of nearly 50 per cent. These so-called say-on-pay votes are non-binding but can send a powerful message of investor dissatisfaction.
Bombardier executive chairman Pierre Beaudoin. (Photo: Victor J. Blue/Bloomberg via Getty Images)
The Bombardier family, which includes Beaudoin, controls the plane and train maker through multiple-voting shares.
The Quebec Federation of Labour's Solidarity Fund said it will vote its 21.2 million shares against Beaudoin and the compensation policy. It will also oppose the re-election of board members who sit on the human resources committee.
After public protests, Bombardier said it was postponing the compensation plan by a year until 2020. The Caisse said the move to delay the payments was welcome, but it's concerned that the decision to increase executive compensation was made in the first place.
While the Caisse said it supports CEO Alain Bellemare's turnaround plan for Bombardier, it believes the original compensation proposal reflects a "lapse of governance'' at the board level.
"The board's recent decisions regarding executive compensation fall short of the necessary standard of stewardship,'' said the Caisse, which owns more than 53 million Class A and B shares in Bombardier. It also has a 30 per cent stake in Bombardier's railway division.
The Caisse said the board should be chaired by a fully independent director rather than a member of the family that controls shareholder voting.
"In addition to this vote, we intend to continue to reiterate to Bombardier's board of directors the importance of this necessary change in governance,'' wrote Kim Thomassin, executive vice-president of legal affairs and secretariat at the Caisse.
A Bombardier CS300 jetliner at the International Paris Airshow at Le Bourget on June 14, 2015. (Photo: Eric Piermont/AFP/Getty Images)
Bombardier said Beaudoin will continue to stand for re-election but would not comment until the matter is discussed at the annual meeting.
The Caisse, which has previously voted against executive compensation hikes at Barrick Gold, joins others that have expressed opposition in recent days to the way Bombardier is run.
The British Columbia Investment Management Corp., an institutional investor group, said it also plans to vote its nearly seven million shares against Bombardier's compensation policy and will oppose non-independent directors.
"The program is structured in a way that does not sufficiently align pay with performance, as it lacks disclosure and contains features that are not in line with best practice,'' it says on its website.
Shareholders rights group Medac said it will also vote against Bombardier's compensation proposal, as it did last year. Glass Lewis, a shareholder advisory firm, has also urged investors to oppose Bombardier's compensation policy.
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