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WestJet board clears Beddoe
BRENT JANG
From Monday's Globe and Mail
WestJet Airlines Ltd. directors have given their full support to chairman and chief executive officer Clive Beddoe, clearing him of any wrongdoing in WestJet's 2003-04 spying campaign against Air Canada.
In a message sent last week to “All WestJetters,” the board tells employees that Mr. Beddoe has conducted himself honourably.
“The independent committee would like to assure all WestJetters that we are very familiar with the facts in this matter, and we know Clive Beddoe is a man of uncompromising integrity,” said the memo endorsed by nine directors on the airline's 10-member board, which is chaired by the tenth member, Mr. Beddoe.
The board issued the statement in the wake of 100 pages of recently filed court documents that show more than 45 e-mails received by, copied to or sent by Mr. Beddoe that discussed rival operations in detail. Most of the attention focused on Montreal-based Air Canada, including analysis of passenger loads — data improperly obtained from the larger airline's confidential employee website.
Air Canada launched a lawsuit in 2004 that accused WestJet of corporate espionage, but the dispute was settled this past spring, with WestJet issuing an apology for spying and agreeing to pay $15.5-million.
“Clive has the full board of directors' support as chief executive officer and chairman of the board,” the memo said. “We hope you will join us in focusing our attention on continuing to make WestJet the airline of choice for Canadian flyers.”
Ronald Greene, former chairman of Renaissance Energy Ltd., is WestJet's lead director and chairman of the independent committee. His name appears first on the list of nine directors backing Mr. Beddoe. Mr. Greene is the second-largest individual WestJet shareholder, holding stock worth $59-million, trailing only Mr. Beddoe, who controls shares valued at $68-million.
Appearing at the end of the list of names is James Homeniuk, who sits on WestJet's board as the employee representative of the non-unionized group called Pro-Active Communication Team (PACT).
In an Oct. 3 news release, Mr. Beddoe described the WestJet e-mails that were contained in an Air Canada booklet submitted to court as containing “false allegations.”
The material, which indicate a broader scope of WestJet's espionage campaign than was previously known, was entered last month into the public court file. Dated May 2, 2006, the booklet is titled “Brief of sample e-mails reflecting Clive Beddoe's involvement in the alleged misconduct.” None of the allegations have been proven in court.
The other directors endorsing Mr. Beddoe are: Allan Jackson, Wilmot Matthews, Murph Hannon, Arthur Scace, Hugh Bolton, Larry Pollock and Brett Godfrey.
“The articles that have appeared in The Globe and Mail over the last few days regarding the Air Canada lawsuit have been very disturbing to us all,” the memo said. “The lawsuit from the beginning was handled exclusively by an independent committee of the board of directors.”
That independent committee in 2004 comprised Mr. Greene, Mr. Jackson, Mr. Matthews, Mr. Hannon, Mr. Pollock and Donald MacDonald. Mr. MacDonald, head of a private oil-field-services firm, left WestJet's board earlier this year. Thomas (Tim) Morgan, a WestJet co-founder, resigned from the airline a year ago, and stepped down as a director in early 2006.
Calgary-based WestJet appointed two new independent directors in September, 2005: Mr. Scace, chairman of Bank of Nova Scotia, and Mr. Bolton, whose directorships include Toronto-Dominion Bank. Mr. Godfrey, CEO of Virgin Blue Airlines in Australia, joined WestJet's board in August, 2006.
Air Canada alleges that starting in March, 2003, WestJet co-founder Mark Hill viewed confidential data for one year on load factors, or the proportion of seats filled, from a special reservations website for Air Canada employees and retirees. Air Canada filed its lawsuit in April, 2004, and Mr. Hill resigned as WestJet vice-president of strategic planning three months later.
The out-of-court settlement included a joint statement that “certain members of WestJet management engaged in an extensive practice of covertly accessing a password-protected, proprietary employee website maintained by Air Canada to download detailed and commercially sensitive information without authorization or consent from Air Canada.”
FMR Corp. of Boston, which manages the Fidelity family of funds, is WestJet's largest shareholder. FMR recently owned 19.1 million WestJet shares, or a 14.7-per-cent interest. The second-largest shareholder is Ontario Teachers Pension Plan, which sold 1.7 million WestJet shares in May, reducing its holding to 16.8 million shares.