Air Transat Board Battle Intensifies Ahead of Crucial Shareholder Vote
A significant corporate governance conflict is escalating at Transat A.T. Inc., the parent company of Air Transat, as the current board urges shareholders to oppose director nominees proposed by its largest shareholder, Pierre Karl Péladeau. This dispute is set to culminate in a pivotal vote during the annual general meeting scheduled for March 10, highlighting deep divisions over the airline's strategic direction and financial management.
Proxy Advisory Firm Backs Current Board
In a recent development, Glass Lewis, an independent proxy advisory firm hired by Transat, has recommended that shareholders align with the board's recommendations on all agenda items. This includes voting against or withholding support for all dissident proposals put forward by Financière Outremont Inc., Péladeau's investment firm, which holds nearly 10 percent of Transat's shares. The board, led by chair Susan Kudzman, emphasized this endorsement in a press release on February 25, stating it reflects confidence in their ongoing plan for sustainable value creation.
Glass Lewis specifically advised shareholders to vote for all eight director nominees proposed by Transat's current board, such as Christiane Bergevin, Daniel Desjardins, and Annick Guérard, the president and CEO. The firm noted that while the dissident nominees, including Péladeau, André Brosseau, and Jean-Marc Léger, have experience in corporate leadership and consumer analytics, they do not address any apparent aviation-specific skill gaps missing from the current slate.
Shareholder Proposals and Board Composition Dispute
The conflict stems from Péladeau's call late last year for a special meeting to prevent further destruction of shareholder value by reducing the board's size from 11 to six directors, with half being newly elected. His firm has publicly criticized Transat's financial position and strategy, advocating for a more streamlined governance structure. In response, Transat's board has proposed an amendment to maintain a minimum of eight and a maximum of 15 directors, which exceeds Péladeau's reduction plan.
Péladeau had suggested new board members, including himself, with Brosseau taking on the role of chair. However, the current board argues that their nominees are better positioned to steer the company toward long-term growth, citing measurable results from their existing strategy. Kudzman described this as a pivotal moment for Transat, emphasizing the board's focus on delivering value for all shareholders.
Key Deadlines and Voting Process
Shareholders must submit their proxy votes by March 6 at 9:00 a.m., ahead of the annual meeting. This deadline underscores the urgency of the situation, as investors weigh the recommendations from both sides. The outcome of this vote could significantly impact Transat's future governance and operational approach, potentially reshaping its leadership amid ongoing challenges in the aviation industry.
The board battle reflects broader tensions in corporate Canada, where shareholder activism and board dynamics are increasingly scrutinized. As the vote approaches, stakeholders are closely monitoring developments, with the potential for significant changes depending on the shareholder decisions.
