TORONTO (Reuters) - Two of Canada’s top pension funds have come out in support of a shareholder proposal calling for greater transparency at plane and train maker Bombardier Inc, despite a rejection of the idea by the company’s management.
Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan (OTPP) both also expressed concern with the Quebec-based company’s executive compensation structure and its related moves to amend its deferred share unit and stock option plans at its annual shareholder meeting on Friday.
The pushback comes at an inopportune moment for Bombardier, which is seeking $1 billion from the federal government to get its long-delayed and well-over-budget CSeries jet program back on track.
CPPIB, the country’s largest public pension plan and one of Bombardier’s top 20 shareholders, said on Tuesday it has issues with the awards granted to executives outside of Bombardier’s compensation plan and the lack of performance-based awards under the long-term incentive plan.
The fund said it is cautiously supporting the company’s nonbinding vote on executive pay, but added that it would be “closely monitoring compensation and disclosure practices at the company going forward.”
CPPIB and OTPP have both voted against proposed amendments to Bombardier’s deferred share unit and stock option plans. Unlike CPPIB, however, OTPP has also voted against Bombardier’s nonbinding executive pay proposal.
Despite the pension funds’ objections and concerns expressed by proxy advisory firms including Institutional Shareholder Services (ISS) and Glass Lewis, the two proposals are likely to carry as the firm’s founding family have a 53.23 percent voting stake, largely through the 79.5 percent of Bombardier’s Class A multiple voting shares they control.
The family’s stake also gives them the voting power needed to block the shareholder proposal put forward by a Quebec-based activist investor group. The proposal would force Bombardier to separately disclose voting results on all resolutions by class of shares.
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 in the past.
OTPP said earlier this week that it backed the shareholder move, calling on the company to separately disclose results on votes. It said the proposal would not be “particularly burdensome to the company” and that it would benefit shareholders.
Bombardier opposes the proposal. It says it gives the necessary levels of disclosure required under local securities rules.
Additional reporting by Allison Lampert and Matt Scuffham; Editing by Alan Crosby and Matthew Lewis