Bombardier defends pay structure after public outcry over executive pay increases

Bombardier is defending its executive pay structure in the face of a public uproar over a hefty increase in compensation to senior management.

Company awarded pay increase to top executives while receiving taxpayer subsidies

The head of Bombardier's human resources sent out an open letter Saturday saying the company's compensation has to be competitive in order to retain talent. (Radio-Canada)

Bombardier was doing damage control Saturday in the face of an uproar over a hefty increase in compensation to senior management, but the company's explanations didn't satisfy all its critics.

Bombardier issued an open letter explaining the company's compensation policies and called it "inappropriate" to compare the 2016 compensation to that of the previous year.

Bombardier must compete with firms globally to recruit and retain talent, said the letter from Jean Monty, the head of Bombardier's human resources and compensation committee.

It also contended that 75 per cent of compensation for most senior Bombardier executives is based on meeting performance targets and is not guaranteed.

"I am confident that our compensation practices are sound," Monty wrote.

"They reflect the global nature of the business and our need to attract and retain the very best Canadian and global talents."

Taxpayer subsidies, executive pay increases

The company is facing a backlash after awarding a nearly 50 per cent pay increase to six top executives in 2016 compared to the previous year while receiving hundreds of millions of dollars in taxpayer subsidies.

Compensation for the Montreal-based manufacturer's top five executives and board chairman Pierre Beaudoin was $32.6 million US in 2016, up from $21.9 million US the year before.

Monty's letter said pay comparisons between 2016 and 2015 are misleading because some of the executives started with Bombardier only part way through 2015 — for example Alain Bellemare was appointed President and CEO in Feb. 2015.

Beaudoin issued a statement late Friday saying he asked the board of directors to reduce his compensation for last year to 2015 levels.

Hours earlier two Quebec cabinet ministers said Bombardier should reflect on the compensation it provided to its senior executives.

Executive salaries 'exaggerated', says union

Beaudoin said he took the step because public trust is important to Bombardier and he was also concerned the issue has become a distraction from the work employees at Bombardier are doing.

However Beaudoin's voluntary pay cut, which Bombardier said will amount to roughly $1.4 million US, was labelled by some critics as an insufficient measure that didn't address the issues behind the hikes.

"Mr. Beaudoin is member of a billionaire family that controls the company. So no, a sacrifice of a million dollars doesn't change anything," said Aaron Wudrick, the director of the Canadian Taxpayers Federation, in an email.

Bombardier's executive chairman Pierre Beaudoin, left, has asked for his compensation to be brought back down to what he was paid in 2015. (Ryan Remiorz/Canadian Press)

Renaud Gagne of Unifor, which represents almost 1,000 Bombardier workers, agreed that Beaudoin's decision to renounce the raise didn't mean much.

"Executive salaries were already exaggerated [in 2015], especially compared to that of the average worker," he said.

"They should be more respectful of the situation seeing as they're asking for public money."

Government bailout

The Quebec government gave Bombardier roughly $1 billion US in 2016 while the federal government recently announced a $372.5 million loan package for the firm's CSeries and Global 7000 aircraft programs.

A spokesman for the International Association of Machinists and Aerospace Workers, which represents some 4,500 Bombardier workers, called Beaudoin's decision "a step in the right direction.

David Chartrand said the bonuses could be seen as disrespectful to workers, especially since Bombardier is eliminating 14,500 jobs around the world by the end of next year.