(The following story by Bertrand Marotte appeared on the Globe and Mail website on May 5.)
MONTREAL — The $5.84-million separation package given to ousted Bombardier Inc. chief executive Paul Tellier is a “scandalous” development that merits being challenged in court, says corporate governance activist Yves Michaud.
Bombardier’s board of directors has displayed flagrant disregard for its fiduciary responsibilities to shareholders by approving the package, especially given the company’s slumping share price, Mr. Michaud said yesterday in an interview.
“This is scandalous, indecent and a provocation,” he said, adding that he is considering filing a suit in court over the issue.
Bombardier spokesman John Paul Macdonald said Mr. Tellier’s separation package was “commensurate with what this market deems appropriate for a CEO who leaves his duties.”
Bombardier is not alone in feeling the impact of the unprecedented downturn in the U.S. airline industry, which is a major buyer of the company’s regional jets, Mr. Macdonald said.
Mr. Tellier left late last year after clashing over the best strategy to revive Bombardier’s fortunes. He was wooed away from Canadian National Railway Co. in early 2003 by Bombardier chairman Laurent Beaudoin.
Mr. Michaud, a veteran shareholder rights advocate known for his scathing attacks on the big banks at their annual meetings, said he plans to ask the major public pension funds — including the Caisse de dépôt et placement du Québec and Ontario Teachers Pension Plan — to back him in his latest crusade.
He said he also plans to approach the Canadian Coalition for Good Governance, founded by Teachers chief executive officer Claude Lamoureux and Montreal investment guru Stephen Jarislowsky.
Mr. Michaud said it’s untenable that Mr. Tellier would receive such a large sum — as well as a yearly pension of $336,000 for life — for barely two years work at the struggling plane and train maker.
He pointed out that his own pension of $33,000 a year is for 25 years of service as a member of the Quebec legislature and top government mandarin.
Mr. Tellier, who turns 66 on Sunday, got a one-time severance payment of $3.84-million, representing two years of his then-annual base salary, Bombardier said in its 2005 management proxy circular, released earlier this week.
He also received $2-million under Bombardier’s mid-term incentive plan covering the period from Feb. 1, 2003 to Jan. 31, 2006.