MONTREAL — The chairman of Bombardier Inc. is defending the multimillion-dollar compensation plan handed to former CEO Alain Bellemare.
Pierre Beaudoin, grandson of the Quebec giant’s founder, told shareholders at the company’s annual meeting Thursday that the board “respected the company’s contractual obligations” to the former chief executive.
“They were not atypical in regard to what other corporations are paying senior management,” he said.
The package Bellemare received when he stepped down in April could reach $17.5 million, including $10 million in severance and nearly $2.7 million in share awards. He will rake in an additional $4.9 million if the sale of Bombardier’s rail unit to France’s Alstom SA goes through following regulatory scrutiny.
Bellemare’s five-year tenure saw the plane-and-train maker struggle to manage a debt that now stands at more than US$9 billion as the company sold off division after division, leaving it a pure-play producer of private jets — a high-end luxury product in a recession.
Quebec pension fund manager Caisse de depot et placement has criticized the compensation arrangement, calling it “excessive.”
At the virtual meeting Thursday, new CEO Eric Martel told investors that developments under his predecessor’s watch were “unacceptable.”
“Repeated program delays and technical challenges have tarnished our reputation for operational excellence,” Martel said. “We understand your disappointment, but I am convinced that we will rebuild this Quebec flagship.”
Martel ruled out the possibility of more layoffs and the need for government financial support for the time being.
“We are discussing with the (federal and Quebec) governments, but we are not at a point where we need any of that support,” Martel said, expressing a preference for private financing or none at all.
“Clearly, in the end, we remain open to having those discussions if things change or the market fluctuates,” said the former head of Hydro-Quebec.
Two weeks ago, Bombardier announced 2,500 layoffs — 1,500 in Quebec — or about 11 per cent of its aviation division in anticipation of a 30-per-cent decline in deliveries over the next 12 months.
Nonetheless, there have been fewer than a dozen order cancellations, Martel said, far less than during the 2008-09 financial crisis.
Brian Acker discusses Bombardier
Brian Acker of Acker Finley gives his outlook for Bombardier.
On Thursday, the board of directors proposed a non-binding resolution on executive compensation which was opposed by a group of institutional investors. The resolution was adopted following a vote, though the precise tally was not released immediately.
The Beaudoin-Bombardier family controls 50.9 per cent of voting rights while holding a small fraction of the nearly 2.4 billion outstanding shares.
Major North American pension funds including the Caisse said they would vote against the compensation plan.
The Caisse — Bombardier’s second-biggest investor at 2.24 per cent — highlighted issues with severance pay and the non-recurring bonuses that will be granted to other executives if the Alstom sale is completed.
“These elements of compensation are considered excessive,” it said.
Other institutional investors that opposed the proposal included the Quebec Labour Federation Solidarity Fund — the investment arm of the province’s largest labour group — the Canada Pension Plan Investment Board, California Public Service Pension Plan, California State Teachers’ Retirement System and Florida’s State Board of Administration.
Several of the pension funds also opted not to support re-election of board members August Henningsen, Vikram Pandit and Douglas Oberhelman, because they sit on the board human resources and compensation committee.
The Caisse supported a proposal by Montreal-based investor rights group MEDAC to disclose voting results by class of shares.
The proposal was voted down. Whether that was due to Class A shareholders remains unknown.
Glass, Lewis & Co., a leading shareholder advisory agency, strongly criticized the compensation amount given to Bellemare, recommending late last month that shareholders oppose a compensation policy that marks a “considerable jump from previous arrangements.”
“When considered alongside the significant, expanded actual severance benefits for Mr. Bellemare despite the company’s performance during his tenure, we believe that the company’s pay practices warrant serious concern and a vote against this proposal,” Glass Lewis said.
Institutional Shareholder Services Inc., the other large proxy advisory agency, gave the policy a thumbs-up in a separate report.
Bombardier spokesman Olivier Marcil said the company is respecting the opinion “expressed by certain investors,” stating that the compensation policy has been supported by 97 per cent of shareholders on average over the three last years.
Nonetheless, governance expert Michel Nadeau said the resistance of institutional investors constitutes a “very strong message” to the board of directors.
“It means that the majority of the shareholders are not satisfied,” he said. “They say, ‘You haven’t done your job, we’re not happy.”‘
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
