Update: Late Friday, the Montreal Gazette reported that Bombardier chairman Pierre Beaudoin will give up his controverial pay increase of $1.4 million U.S., scaling it back to 2015 levels. I don’t know how much he will be earning, but CEO Alain Bellemare got $9.5 million U.S., including a $2.26-million bonus. No word yet on whether he and other executives involved in the controversy will give up their bonuses and raises.
Bet you’ve heard a story like this before: Struggling company throws thousands of workers into the streets, and awards its top brass big, fat bonuses and salary increases.
It happens all the time, right?
Executives get performance bonuses and pay raises for cutting costs by laying off workers.
Yes, of course it rankles the rank and file of the workforce to see the brass bellying up to the trough while so many people are filling out applications for unemployment insurance.
It seems hypocritical, but that’s just the way it is in the capitalist system. The people paying executives — the company owners — in these situations could say that the money saved by reducing their workforces more than makes up for any bonuses paid to executives. And they could argue that in order to retain executives who can compartmentalize any crisis of conscience that comes with doing the owners’ dirty work, they have to give them the bonuses. And round and round it goes.
It’s just business, and companies in the private sector really don’t have to answer to anyone in these situations.
Except, perhaps, when they have been propped up by various levels of government with taxpayers’ money.
And that’s why Quebec’s Bombardier is finding itself under fire this week. The optics of company executives being awarded more than $32 million U.S. — nearly 50 per cent more for its top five executives and board chairman compared with 2015, according to reports — is just too much for working class heroes, the media and even some members of the investment community.
According to a CBC News report, Bombardier has “announced job cuts totalling 14,500 positions worldwide over the last two years.”
It went begging to the provincial government of Quebec and Canada’s federal government for money to help it get its CSeries aircraft off the ground — and to avoid even more layoffs, supposedly.
Quebec’s Liberal government ignored naysayers, ignored the controversy and coughed up $1 billion U.S. of taxpayers’ money last year, in exchange for a 49.5-per-cent stake in the CSeries program. “The province’s pension fund manager, the Caisse de dépôt, also bought a 30 per cent stake in the company’s railway division for $1.5 billion U.S.,” the CBC reports.
And then the feds, also ignoring naysayers and the controversy, came up with a $372.5-million loan for Bombardier.
So, we’re talking about close to $3 billion of taxpayers’ money has been “invested” into and lent to Bombardier.
Meanwhile, Brazil has launched an official complaint to the WTO over the loan to Bombardier, saying Bombardier is being given an unfair advantage over chief rival Embraer in the competitive sales world of commercial aircraft.
So, Bombardier has made off like a proverbial bandit — with its executives seemingly laughing all the way to the vault with a big chunk of taxpayers’ money. Hahahahahaha!
Personally, I have serious doubts that we taxpayers will ever see a return on our investment, let alone get back our initial investment and loan. But our elected officials felt it was a worthwhile risk, right?
Despite the public outcry over the $32 million in compensation for Bombardier executives, Quebec Premier Philippe Couillard stands by his government’s decision, saying they have invested in the CSeries jet, not the company as a whole. He has sidestepped the executive compensation issue, according to the CBC.
Prime Minister Justin Trudeau is defending his decision, too, saying: “Investing in Bombardier is a way of ensuring good long-term jobs in the aerospace industry right across the country.”
Hmm. Does that even make sense? (see above: 14,500 jobs being cut)
The CBC reports that “Michel Nadeau, the head of Quebec’s Institute for Governance of Private and Public Organizations, is also harshly critical of Bombardier. He … says the executives’ salary increases are unacceptable and should be reversed.”
Bombardier, for its part, says “the executive compensation is consistent with what’s seen at other companies,” the CBC says.
Umm. The compensation may be consistent with private companies that aren’t being propped up by willing and unwilling taxpayers. But in Bombardier’s case, it seems like an extreme case of greed without a thought for the revolting and disgusting optics.
And without a thought for how it might make both the Quebec Liberals and the federal Liberals appear to be complicit in the action at the trough.
And, perhaps most important of all as the public outrage grows, without a thought for how it could result in a loss of votes for both Liberal parties in the next elections, especially if their Bombardier investments and loan with taxpayers’ money turn sour.
So, don’t be surprised if Bombardier announces that the big, fat increases to their executives are rescinded — at least until such time the company actually turns a profit.
On that latter point, I wouldn’t hold my breath.
Photo: Bombardier C-Series CS100 FTV2 First Flight C-GWYD 50002. Photo credit: Patcard via Foter.com / CC BY-NC-ND