Will Bombardier’ Executive Structure Change?

A number of reports have come out of late, suggesting that Bombardier’s chair Pierre Beaudoin may be forced to step down from his executive chairman position after pushback from the largest shareholders of Bombardier, Inc. (TSX:BBD.B).

The Bombardier board of directors has been in hot water of late after recommending a pay package that would see the company’s top directors receive pay hikes of approximately 50% across the board.

Large institutional investors such as the Ontario Teachers’ Pension Plan, Caisse de depot et placement du Quebec, Quebec’s Solidarity Fund FTQ and British Columbia Investment Management Corp have made it clear publicly that support for the executive pay plan will not happen, and these investors have also begun to ask for independent leadership within the company’s board of directors.

The move toward a more independent board is unlikely to change much in terms of how the company operates, as all significant decisions with respect to Bombardier’s direction which are voted on are, in essence, meaningless as the Beaudoin family controls 53% of the company’s voting shares.

My take on the current situation on Bombardier is a bleak one; I believe that any investor who does not like the direction the company is headed should put their money elsewhere, as activism and public calls for change have done little to change anything in the past, and I am skeptical they will do anything to change the current situation now.