Bombardier faces potential minority shareholder pushback at AGM

Wed Apr 13, 2016 1:36pm EDT
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By Euan Rocha and Allison Lampert

TORONTO/MONTREAL, April 13 (Reuters) - Bombardier Inc is set to face pressure for greater transparency at its annual meeting later this month after an influential proxy advisory firm advised clients to vote against management of the Canadian manufacturer on a key resolution.

Institutional Shareholder Services, a well-regarded advisory firm that institutional investors often rely on for direction on shareholder votes, advised its clients in a report on Tuesday to support a shareholder proposal that would force the company to separately disclose voting results on all resolutions by class of shares.

Despite the ISS recommendation, the resolution is unlikely to succeed. The company is opposed to the proposal and its founding family have a 53.23 percent voting interest in the company, largely through the 79.5 percent of Bombardier's Class A multiple voting shares they control.

Bombardier's Class A shares entitle shareholders to 10 votes per share, while its Class B shares carry 1 vote per share. The company's dual class share structure has faced criticism from investors in the past.

The shareholder proposal has been put forward by Mouvement d'éducation et de défense des actionnaires, a Quebec-based activist investor group that owns a symbolic number of shares in Bombardier.

Médac President Daniel Thouin welcomed the ISS backing and noted that another Quebec-based entity Quebecor agreed last week to publish separate voting results for its dual class shares, following pressure from the group.

ISS, whose advice typically sways large swathes of votes at shareholder meetings, also advised its clients to vote against Bombardier's resolutions to amend its stock option plan and its deferred share unit (DSU) plan.

It said the cost of the amended stock option plan would be excessive, while adding Bombardier had not provided "sufficient rationale" for changes to its DSU plan.   Continued...