page 22 Bombardier Inc. Annual Report 2003-04 REKINDLING the vision A year ago, in my message to shareholders, I expressed confidence in our then recently appointed President and Chief Executive Officer, Paul Tellier. I am pleased to observe that, over the intervening months, my assess- ment of his leadership abilities has proven to be more than justified— as demonstrated by the successful recapitalization and restructuring of  the organization, and the ongoing action plan to restore earnings power  and shareholder value. I should note as well, that my confidence in Mr. Tellier is evidently shared by his peers, who recently selected him as Canada’s most respected CEO for the second year running. Bringing in new leadership was critical to getting Bombardier back on track, but that was just the first step. Over the course of fiscal year 2004, we have seen the successful culmination of a $2.5-billion recapitalization  program, a refocusing of the Company’s activities around two core busi- nesses—aerospace and transportation—and the introduction of tough new measures designed to enhance the competitiveness of all our operations. We also have been busy building on Bombardier’s solid track record in the crucial area of corporate governance. Our approach to corporate governance has always been to ensure that the Company’s affairs are effectively man- aged to enhance value for all shareholders. However, in the context of the broader public debate swirling around governance issues, I committed at the outset of the fiscal year to overseeing a major review of the structure and responsibilities of our Board of Directors. That review resulted in a number of initiatives designed to further strengthen Bombardier’s governance prac- tices, while ensuring the Company’s ability to comply with sweeping changes to reporting and regulatory requirements.  Details of these initiatives, which took effect at the time of the annual general meeting in June 2003, can be found in the Corporate Governance section of this report. However, in keeping with my commitments of a  year ago, I would like to briefly review some of the key changes that have been enacted.  The executive committee of the Board has been disbanded and the four Board committees are: the Audit Committee; the Human Resources and Compensation Committee; the Corporate Governance and Nominating Committee; and the Retirement Pension Oversight Committee. All these  committees are comprised exclusively of highly-qualified, independent  (non-related) directors. We also have reviewed the mandate of the Board, as well as my mandate and that of the President and CEO. On my recommendation, the Board has appointed a Lead Director— which further ensures that the Board is totally independent of management. The role of Lead Director has been ably assumed by James E. Perrella, In recent months, Bombardier has been pressing ahead with other  important, governance-related measures. In January 2004, for example, we appointed a corporate Compliance Officer. The Compliance Officer’s  responsibilities include assisting the Board in ensuring full adherence  to applicable laws and regulations, as well as strict compliance with Bombardier’s Code of Ethics and Business Conduct, which was reviewed and updated during the year. The divestiture of the recreational products business provided us with an ideal opportunity to put our approach to corporate governance into practice. As soon as family members expressed an interest in being a party to the group of buyers, in order to ensure the stability and continuity of the recre- ational products business, appropriate steps were taken to make certain  that the rights of all shareholders were fully protected through a process that reflected the highest standards of governance.  As a member of the family, I wish to emphasize that the entire sale process was scrutinized by an independent committee of the Board. A former auditor general of Canada, L. Denis Desautels, chaired the committee. The Board received favourable fairness opinions from its own financial advisor, UBS, and from Morgan Stanley, financial advisor to the inde- pendent committee. As well, directors who are members of the Bombardier family—including the undersigned—abstained from participating in  Board meetings at which the sale was considered and did not vote on  the transaction. retired chairman and CEO of the Ingersoll-Rand Company, who has been a Bombardier director since 1999. At their discretion, either prior to or after each regular Board meeting, independent directors meet under the chair- manship of Mr. Perrella, who brings any questions, comments or suggestions from the independent directors to the attention of the Executive Chairman and/or the President and CEO. The Lead Director also chairs the pivotal Corporate Governance and Nominating Committee.  Continuous, systematic evaluation of all aspects of governance is an  integral part of our approach. For instance, one of my primary responsi- bilities—as stipulated in the mandate of the Executive Chairman—is to ensure the quality and continuity of the Bombardier Board. This entails meeting with the Corporate Governance and Nominating Committee to review the collective performance and the mandates of the Board, as well as that of the Board committees, committee chairs and individual Board members. Our discussions also involve potential director candidates and nominations for Board membership. Special committee scrutinized asset sale Ensuring compliance with new regulations Governance, another top priority