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MONTREAL (Reuters) - Quebec's biggest pension fund will not back Bombardier Inc Executive Chairman Pierre Beaudoin's re-election bid, according to a letter published on Monday, in a rare public display of displeasure with the plane and train maker's founding family.
Caisse de depot et placement du Quebec, one of Bombardier's biggest shareholders, said in a May 8 letter that it had withheld its vote for Beaudoin before this week's annual meeting. The decision followed an outcry over controversial executive pay hikes at Bombardier, which Beaudoin later agreed to forego and other executives agreed to defer.
The company's board should be headed by a fully independent director, Caisse said.
The pension fund, which owns almost 48 million B shares and about 5.7 million A shares in the company, also opposes a company advisory vote on executive compensation.
Beaudoin, a former chief executive, is a scion of Bombardier's founding family, which controls the company through its dual-class share structure.
"In our view, the board's recent decisions regarding executive compensation fall short of the necessary standard of stewardship," Kim Thomassin, executive vice president legal affairs and secretariat for Caisse, wrote in the fund's letter.
In a statement, Bombardier said its board of directors acknowledged the position expressed by the pension fund and that shareholders would "have an opportunity to discuss these important questions," at the meeting on May 11.
Caisse has previously clashed with Bombardier. In 2015, it asked the family to reduce the power of its 85 percent stake in Bombardier’s super-voting "A" shares. The family rejected the suggestion and in response Caisse declined to serve as the lead investor in a 2015 debt and equity capital raising, sources told Reuters at the time.
Relations were patched up enough for Caisse to take a 30-percent stake in Bombardier’s money-generating rail division in November 2015, after the provincial government also helped shore up the Quebec icon with a $1 billion aid package.
While Caisse praised Bombardier's decision to defer the payment of more than half of total planned 2016 compensation for its six named executive officers until 2020, the pension fund questioned the initial reasoning behind the hikes.
"Our concern is that the initial decisions were made in the first place and what that reflects about the governance of the company. This is especially true for the compensation that the board plans to pay the executive chair," Thomassin added.
Last month, Charles Bombardier, Beaudoin’s cousin, said his family had discussed government and board succession after the executive pay uproar and some family members wanted new blood for its representatives on the board.
Like Charles Bombardier, Beaudoin is a grandson of company founder Joseph-Armand Bombardier, who died in 1964.
British Columbia's main public sector pension fund has said it planned to withhold support from all five of the Bombardier-Beaudoin family members on the company's board.
Reporting by Allison Lampert; editing by James Dalgleish and Tom Brown