Bombardier executive payout causing problems for Trudeau’s middle class claims
This is not helping the middle class,” said interim Conservative leader Rona Ambrose, who wondered how the company can afford to enrich its senior leaders while laying off employees
OTTAWA—Justin Trudeau refused to denounce Bombardier for enriching its executives even as the company rakes in nearly $1 billion in taxpayer money, drawing opposition charges that the Liberals are on wobbly legs when it comes to standing up for the middle class.
The ensuing public outcry has prompted the Montreal-based aerospace firm to put off for a year giving six executive officers more than half of the compensation it had planned _ and has also prompted the prime minister to change his tone.
Last week, Trudeau said the government respects “the free market and the choices that companies will make.” On Monday, he said the government is “obviously not pleased” with Bombardier’s decision, “but we are happy to see it make decisions that are fixing that for Quebecers’ and Canadians’ confidence.”
Bombardier is eliminating 14,500 jobs around the world by the end of next year, part of a restructuring plan aimed at helping the company turn itself around. The plan includes federal and provincial money: a $372.5-million federal loan for Bombardier’s CSeries and Global 7000 aircraft programs, and $1 billion from Quebec.
Last week, the company issued a proxy circular showing that six executives were in line for a nearly 50 per cent increase in compensation, most of which was to be granted in 2019.
The fact the company can afford to enrich its senior leaders while laying off employees suggests the taxpayer money they were given by the government is doing nothing to help Canadians, said interim Conservative leader Rona Ambrose.
“This is not helping the middle class. This is lining the pockets of the 1 per cent of the 1 per cent with tax dollars,” Ambrose said during question period.
Anger at the planned pay raises culminated in a weekend protest at the company’s Montreal headquarters and a late night climb-down by Alain Bellemare, the chief executive officer, who declared he was asking Bombardier’s board of directors to delay the payments.
The company underestimated public anger and is now paying attention, Bellemare said.
The Liberals, however, remain tone-deaf, opposition MPs charged.
“We have seen anger expressed by voters in both the United States and in Canada about how out of touch elites are,” Conservative leadership candidate Michael Chong wrote in an email to supporters.
“The Bombardier example is one reason why this anger is out there. And citizens and taxpayers have every right to be upset.”
Government bailouts to industry are a politically sensitive issue for the Tories, given their avowed commitment to free market principles but also the fact that while in government, they provided billions to bail out the auto sector.
Conservative MP Tony Clement—who was industry minister at the time of the auto bailout in 2009—said in his view, 400,000 jobs were on the line and had Canada not helped shore up the automakers, the economy would have collapsed.
“It was an extraordinary circumstance. We were facing an economic depression,” Clement said. “Bombardier, every year they come to the government asking for more money.”
Clement is supporting leadership candidate Maxime Bernier, who has said he disagreed with his government’s decision at the time, and that he won’t support bailouts if he becomes leader.
“Corporate welfare is a terrible policy, for businesses, for taxpayers, for Canadians,” he said in an April 3 letter to supporters.
The only way to help them is by cutting taxes, Bernier said.
The Liberals had also pledged to make cuts—to provisions that help corporate CEOs like those at Bombardier make more money, pointed out NDP leader Tom Mulcair on Monday.
Total compensation for Bombardier’s top five executives and board chairman Pierre Beaudoin was to be US$32.6 million in 2016, up from US$21.9 million the year before, and some of that is in stock options.
People pay less tax on income earned on stock options than they do if they are paid in cash.
The Liberals had pledged to close that tax loophole but have backed off in the last two budgets, arguing in the past that for many companies it is a valuable way to compensate all employees, not just CEOs.