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GOVERNANCE

Pension funds line up against Bombardier compensation, split on re-electing chairman

Bombardier train

A number of large pension funds are voting against Bombardier Inc.'s approach to executive compensation, while they are divided in their support for its executive chairman.

The $318.9 billion California Public Employees' Retirement System, Sacramento; $202.8 billion California State Teachers' Retirement System, West Sacramento; C$175.6 billion ($128.6 billion) Ontario Teachers' Pension Plan, Toronto; C$270.7 billion Caisse de Depot et Placement du Quebec, Montreal; $189.4 billion Florida State Board of Administration, Tallahassee; and C$287.3 billion Canada Pension Plan Investment Board, Toronto, are all voting against the company's executive compensation approach, according to their proxy-voting disclosures.

Ontario Teachers said it found Bombardier's disclosure on its compensation decisions in the company's proxy statement “insufficient to determine the strength of the linkage between pay and performance.”

Additionally, Kim Thomassin, Caisse's executive vice president, legal affairs and secretariat, wrote in a letter to Daniel Desjardins, Bombardier's senior vice president, general counsel and corporate secretary, on Monday that despite recent adjustments to executive compensation, concerns over why the initial decisions were made persist.

Following public debate on Bombardier's executive compensation practices, Pierre Beaudoin, executive chairman of the board, requested in March that his total planned compensation for 2016 be reduced by $1.4 million to its 2015 level of $3.8 million. Additionally, in April, Alain Bellemare, Bombardier's president and CEO, requested that more than 50% of the total planned 2016 compensation for himself, Mr. Beaudoin and four other executives be deferred until 2020 and only paid out “if the company achieves performance goals that position it for long-term success, in line with the company's strategic plan,” Mr. Bellemare said in a statement.

The total planned compensation for Mr. Bellemare was $9.5 million in 2016, up from $6.4 million in 2015, according to the company's proxy statement. The total compensation for the four other executives ranged from $4 million to $4.7 million in 2016, up from a range of $2.4 million to $3.3 million in 2015. CalSTRS, Ontario Teachers, Caisse and the CPPIB also indicated they are withholding their votes for Mr. Beaudoin. CalSTRS is also withholding its vote for 12 other directors. The CPPIB is withholding its vote for two other directors.

“Improving Bombardier's standard of stewardship goes far beyond the immediate issues of compensation … As one step in enabling the board to play this critically important role, and hence, to move toward substantively better governance, in our view, Bombardier's board should be chaired by a fully independent director,” Ms. Thomassin wrote to Mr. Desjardins. Caisse manages assets of Quebec's public provincial and municipal pension funds.

CalPERS and the Florida State Board of Administration support Mr. Beaudoin's re-election.

The $133.2 billion Texas Teacher Retirement System, Austin, also supports Mr. Beaudoin's re-election and supports the company's executive compensation approach, according to its proxy-voting disclosure.

Bombardier's annual meeting is Thursday.

In a statement Monday, Bombardier acknowledged Caisse's position and said there will be an opportunity at the meeting to address its concerns.