Compensation at Bombardier | A profitable stock market push for Éric Martel

By leaving Hydro-Québec to take the helm of Bombardier in the spring of 2020, Éric Martel has made a decision that promises to pay off: the value of his call options on shares has already reached 12 million – and it is likely to increase. at the rate things are going at the aircraft manufacturer.

The private jet manufacturer confirms the calculations made by The Press with the data appearing in the circular sent to shareholders in view of the annual meeting scheduled for April 27. This document also reveals that the five main executives of the Quebec multinational were entitled to a total compensation of approximately 21 million (16.5 million US) in 2022. The data is presented in US dollars in the circular.

A stock option allows an employee to buy it at a pre-determined price and is one of the compensation mechanisms used by publicly traded companies. Managers are rewarded when the stock goes up since they can buy it at a bargain price and then resell it and pocket the difference.

“It’s a considerable sum in the case of Mr. Martel, but when he arrived at Bombardier, many were wondering about the future of the company, underlines François Dauphin, director general of the Institute on governance private and public organizations (IGOPP). It will be able to go to the checkout, but we are really talking about a turnaround that seems successful. »

Stock market boom

On Friday, on the Toronto Stock Exchange, Bombardier’s stock closed at $64.81. When the company completed a 25-to-1 reverse stock split on June 13, 2022, the stock closed at around $26.85.

The rise of the aircraft manufacturer’s title began last fall. Since then, the Quebec multinational has raised its financial forecasts and has just raised the targets of its recovery plan, which should culminate in two years.

“I remember that many people were skeptical about our ability to achieve our 2025 objectives,” Mr. Martel said Thursday during a press briefing on Investor Day. I am happy to see that halfway through, we are able to say that we can go even further. »

Of the 17 analysts who follow the activities of the multinational, 11 recommend the purchase of the action. Their average target price for the stock is $68.45, according to data firm Refinitiv.

Some analysts are much more optimistic. Benoit Poirier, of Desjardins Securities, sees the action climb to $99. If this scenario materializes, it would significantly increase the value of the options of the big boss of Bombardier.

” He [M. Martel] will go to the checkout, but so will the shareholders, says Mr. Dauphin. Sometimes we wonder if this kind of incentive plan works, but we seem to have an example where it does. »

Mr. Martel will not be able to pocket everything at once. He will have the right to exercise options on a first tranche of 146,674 shares as of May 14. Converted into Canadian dollars, the exercise price was set at 11.50. It will be in effect for four years. A similar mechanism applies for the following years.

Stability

In 2022, the president of the business jet manufacturer was entitled to a total pay of 8.7 million (6.7 million US), an amount which takes into account the base salary, bonuses and other benefits. This is an increase of approximately 14.5% over the previous year when the exchange rate is taken into account.

At the end of a year in which the company exceeded its financial targets, its top executives shared cash bonuses of 9 million (7 million US). Mr. Martel was entitled to 3.4 million (2.6 million US).

The depreciation of the loonie against the greenback has had an effect on the overall pay of Bombardier’s five main executives from 2021 to 2022. If the amount remains stable in Canadian dollars, it shows a decline of 4.4% compared to the total of 17.2 million US accounted for in 2021.