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.”‘
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
