So Bombardier executives thought the best use of government funding was to put it in their own pockets? Unbelievable.
On February 7, 2017, the federal government provided Bombardier with a four-year loan in the amount of $372.5 million. Interest free. This is a bailout, make no mistake. The company carries almost $9 billion in long-term debt, with an average interest rate of 6.8% per year. They would be hard pressed to borrow money from commercial lenders at any price, let alone interest free.
Bombardier has endured a long and horrific spell of mismanagement, regularly missing delivery dates on big projects like Toronto's streetcar replacement program. In the last three years, the company has lost $7.5 billion. Six years ago, the company's stock price was over $7.00 per share. It now sits at $2.04.
By any measure, the company's six senior managers have earned, at best, a stern warning that things had better improve. Instead, they tried to award themselves a 50% increase on the $21 million in compensation they received in 2015. What on earth were they thinking?
At the annual general meeting on April 2, 2017, they tried to save face by requesting that half of their compensation be deferred until things turnaround. That sounds noble, until you realize the meeting was picketed by protesters carrying signs calling the Bombardier executives "neo-aristocrats" and anti-Robin Hoods who steal from the poor to give to the rich.
Until they faced such outrage, the six executives were quite content to receive their $32.6 million in performance bonuses. Noblesse oblige is so passée.
This article only mentions the most recent government support received by Bombardier, the federal government's loan to in February. The Government of Quebec has also supported Bombardier, and to a much greater extent. It made a significant equity investment in the company over the last year or so, both directly and through the Quebec Pension Plan investment fund. That deserves to be the subject of a separate article.
Suffice to say, people in Quebec are not happy with Bombardier's executives.
Photo of column in Toronto's magnificent Museum subway station, taken in 2014.
Toronto streetcar poster by my graphical genius son-in-law, Scotty Graham. Purchase yours at scottygraham.ca.