(Adds details from annual general meeting, shareholder comment,
Breakingviews link and updates share price)
By Allison Lampert
MONTREAL May 11 Bombardier Inc
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 percent.
Beaudoin, a scion of Bombardier's founding family which
control the company through a dual class share structure, will
continue as non-executive chairman, despite calls from several
key shareholders for an independent director at the helm of the
Maxime Chagnon, a spokesman for Caisse de depot et placement
du Quebec, the company's largest outside investor, called the
change in Beaudoin's role a "step in the right direction," but
said the pension fund still believes "Bombardier needs an
Other Canadian funds like Canada Pension Plan Investment
Board (CPPIB), and Ontario Teachers Pension Plan (OTPP), which
joined Caisse in withholding their votes for Beaudoin's
re-election at Bombardier's annual meeting in Montreal on
Thursday, declined to comment.
Michel Nadeau, director of the Montreal-based Institute for
Governance described Beaudoin's new role as an example of the
founding family stepping back and a "new chapter in the history
of the company," although he told reporters he would have also
preferred an independent director at the board's helm.
A non-executive chairman does not interfere with day-to-day
matters and the separation of executive and non-executive
chairman roles is often seen as a way to improve corporate
Earlier in the day, the company reported
better-than-expected free cash flow usage, a key metric watched
by investors, because of lower expenses. Bombardier shares
jumped as much as 9.8 percent to C$2.25, logging their biggest
one-day percentage gain since April 26, 2016.
While Bombardier executives faced a small protest outside
the meeting at a Montreal plant, shareholders approved Beaudoin
as board chairman, with 92 percent voting in favour, while 93
percent of shareholders also backed the company's new executive
Beaudoin, Bombardier's former chief executive, was named
executive chairman to assist current Chief Executive Officer
Alain Bellemare's transition into his new job in 2015. Bellemare
told reporters on the sidelines of the meeting that Beaudoin's
new role comes at a "good time" after his "smooth and stable
It also follows a March decision by the company to award its
top five executives and chairman raises of up to 50 percent a
few months after announcing thousands of layoffs and receiving
more than $1 billion in government funding. The move sparked
widespread protests and a dressing down by Canadian Prime
Minister Justin Trudeau.
Beaudoin later agreed to forgo his raise while other
executives deferred them.
When asked on the sidelines of the meeting whether the
public should still have confidence in the family, Pierre
Beaudoin's father Laurent Beaudoin told reporters: "They (the
public) should have because we built the company."
Beaudoin's 2016 executive chairman compensation of $3.8
million will be changed, although the company did not reveal his
Shareholders like Caisse also reiterated their support for
Bellemare, who is leading a five-year turnaround plan praised by
analysts on Thursday.
Strength in Bombardier's train-making unit helped the
company report a smaller-than-expected adjusted first-quarter
The adjusted net loss attributable to shareholders was $1
million, narrower than the loss of $22.8 million that analysts
estimated, according to Thomson Reuters I/B/E/S.
In an analyst call, Bellemare said an anti-dumping petition
filed by Boeing Co against the sale of the new CSeries
aircraft in the U.S. would have a "serious" impact on airlines,
innovation and competition in the aerospace industry.
"We'll fight this," Bellemare said later of the petition.
(Reporting by Allison Lampert in Montreal and Arathy S Nair in
Bengaluru; Editing by Jeffrey Benkoe and Bernard Orr)