Side effect of public money? Public headaches
Bombardier feels wrath of public with no patience for C-suite largesse
Apr 4, 2017
Bombardier CEO Alain Bellemare speaks during a ceremony to announce the delivery of the first CS300 aircraft to Air Baltic in this 2016 file photo. REUTERS/Christinne Muschi
By Todd Humber
Feeding from the public trough might be tempting, but taking public money poses a host of risks for private organizations.
Just ask Bombardier. Not only does CEO Alain Bellemare get to be on the cover of the next issue of Canadian HR Reporter for less than flattering reasons, but he also faced the wrath of government officials and the general public over executive compensation practices.
Bombardier, an aerospace giant, has fallen on hard times recently. The Quebec government stepped up to help out, handing over roughly $1 billion in 2016, and Ottawa recently pumped a bit more air under its wings with a $373 million loan to lift its CSeries and Global 700 aircraft.
No argument from these quarters on the loans. Governments have stepped up before to save struggling private-sector industries. Back in 2009, the province of Ontario and Ottawa combined to pump $13.7 billion into the gas tanks of troubled automakers. The move arguably saved Ontario’s critical automotive sector, even though taxpayers didn’t recover the total investment. According to the Globe & Mail, when all the dust had settled and governments divested their shares, there was a $3.5 billion shortfall.
When Bombardier bellied up for help, government answered. But the dollars came drenched with expectations, and the folks footing the bills – the general public – have zero appetite for C-suite largesse. Remember, this is a country that scrutinizes public-sector consultants who expense a cup of tea for $1.40.
When news broke that the troubled firm was handing out $32.6 million US in bonuses (that’s nearly 44 million loonies), well, some stuff hit the fan in La Belle Provence. Hundreds of people protested outside Bombardier’s headquarters in Montreal. Jessica Lacombe, a teacher, summed it up best: “If it’s private money, they can do what they want. But now it’s public money. It’s our taxes, it’s our money,” she told the CBC.
HR professionals will be the first ones to point out, rightly, that even troubled firms need to provide attractive compensation to reward – and attract – talent in key roles. Arguably, it’s even more important for firms in the red. But that’s a nuance that is easily lost on the public, especially when they have skin in the game.
They ask, quite simply: If your executives are so talented, then why are you in this mess? That’s a tough query to answer in a compelling way. Bellemare admitted the company didn’t do a good job of explaining the bonuses and the compensation policies, and “understands why people are so angry.”
“We were doing this to attract top talent because we need that to put the company back on the right track,” he told the CBC. “It will be payable only – and only if – we deliver on our financial goals.”
But it wasn’t just the public crying foul. At least two Quebec cabinet ministers also joined the chorus, and even Premier Philippe Couillard raised the issue with Bellemare. The bonuses aren’t being eliminated, just kicked down the road to a day when the company is (hopefully) on more solid ground and has turned itself around. The ire will be non-existent if the cheques are cashed on that day.
And while we’re talking about the public trough, it’s time to revisit Ontario’s policy on revealing salaries in the public sector. The province’s so-called Sunshine List has turned from an exercise in government transparency to revealing the salaries of far too many ordinary workers.
When it was launched 20 years ago, it published the names of any public-sector employees who earned $100,000 or more. In 1996, it had 4,576 names on it.
Fast forward to 2017, and the threshold hasn’t changed a single penny. Earn more than $100,000 in the public sector, and your name, title and salary are all available for your neighbours to peruse and gossip over. From an original list of 4,500 names it has risen to 123,572 individuals. I know a half dozen or so people on the list, and none of them are exactly living high off the hog.
I’m a journalist, so I’ll be the first to admit $100,000 is a pretty great salary. But is it a salary that deserves public scrutiny? Inflation alone means that $100,000 figure from 20 years ago should be at least $144,000 today. By that number, about 22,300 people would be on the list today. Instead, we all get to see the salaries of countless cops, teachers, nurses and power workers.
It’s compensation voyeurism, and a political hot potato. Ontario Premier Kathleen Wynne has no appetite for changing the threshold to match the rate of inflation – she won’t be casting any clouds in front of that sun.
“You know, $100,000 is still a lot of money so we’re going to keep it at that level,” she said. “People have a right to know where those salaries sit at.”
The lesson in all this remains simple. Private companies can pretty much do whatever they want with money. But dip your hand into that tempting cookie jar of public money at your own risk: Every single penny will be scrutinized.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.
Todd Humber is the publisher and editor-in-chief of Canadian HR Reporter, the national journal of human resource management. Follow him on Twitter @ToddHumber