(Adds comments by Quebec government officials, marketing
By Allison Lampert and Leah Schnurr
MONTREAL/OTTAWA, April 3 Canadian plane and
train maker Bombardier Inc tried to contain a public
relations debacle on Monday after protests and a dressing down
by Prime Minister Justin Trudeau over hefty executive pay hikes
just weeks after its latest government loan.
Bombardier, which has received more than $1 billion in
federal and provincial government aid since 2015, awarded its
top five executives and board chairman raises of up to 50
percent for 2016.
The pay hikes, disclosed in public filings last week,
sparked protests outside Bombardier's Montreal headquarters on
Sunday and calls by opposition leaders for a company freeze on
Bombardier retreated on Sunday, saying that more than 50
percent of the total planned compensation will be deferred until
2020 and will be payable only if the company achieves
performance goals. Executive Chairman Pierre Beaudoin also
renounced his raise on Friday.
"We didn't do a good job of communicating it," Chief
Executive Alain Bellemare told a Quebec radio show on Monday.
"If you look at it at face value, I can understand why people
were so angry, so unhappy."
The compensation packages for the executives and the board
chairman included salary, bonuses and stock options. The company
was able to defer part of the raises because the remuneration
tied to options is forward dating, a spokesman said on Monday.
Bellemare said the pay was needed to retain top talent.
But Quebec and Canadian government officials said they were
not surprised by the public anger against Bombardier, which
announced plans in 2016 to lay off more than 14,000 people in
the province and globally over two years.
Bombardier, which was forced to consider bankruptcy in 2015
after facing a cash crunch while developing two new planes,
received a $1 billion investment from Quebec in its CSeries
110-130 seat jet program. Last February, it received C$372.5
million in loans from Ottawa.
"They didn't realize what impact it would have on the
population and on the elected officials as well," Quebec Economy
Minister Dominique Anglade told reporters at a Montreal aviation
A poll by French-language network Quebecor Media showed that
93 percent of Quebecers opposed the raises.
"This should have been managed by Bombardier internally,"
said a Quebec aviation industry executive, who requested
anonymity because of the sensitive nature of the topic.
"Quebecers financed a piece of the CSeries, they feel like
Bombardier belongs to them. So they were shocked."
Speaking in Parliament on Monday, Trudeau criticized the
company's planned compensation hikes for its senior executives.
"We're obviously not pleased with the decision that
Bombardier made around its remuneration for its executives,"
Trudeau said in Parliament. "But we're happy to see them make
decisions that are fixing that for Quebecers' and Canadians'
Trudeau had given a more muted response when pressed on the
issue last Thursday, saying: "We respect the free market and
choices companies will make, but we also have a responsibility
to ensure the investments we make with taxpayers’ dollars are
leading to good jobs and growth."
While Bombardier's financial situation has improved since
2015, with the company setting a 2018 breakeven target, the
company is still burning cash as it ramps up production of its
flagship CSeries jet and works to bring a new business jet, the
Global 7000, to market.
"Bombardier is doing a lot better, but they are not out of
the woods yet, so they still need the government to be looking
at them favorably," said one transportation analyst who spoke on
condition of anonymity because he is not authorized to talk to
(Editing by Leslie Adler and Matthew Lewis)