By Andrea Shalal and Allison Lampert
WASHINGTON/MONTREAL (Reuters) - Pierre Beaudoin is expected to step down as executive chairman of Canada's Bombardier Inc (TO:BBDb) in early 2016, according to a source familiar with discussions about the issue, a move that could erode family control of the plane and train maker.
The source, who was not authorized to speak publicly, said the move was still being discussed and it was not clear who would replace Beaudoin, a member of the family that controls the company. A decision could only be taken during a board meeting.
One option would be to appoint Chief Executive Alain Bellemare as chairman, rewarding his successful drive to secure investors and improve the company's balance sheet, said the source.
"Alain's done a great job since he got there, and it would be a natural succession plan to have him assume the role of chairman," said the source. "It's time for new leadership."
Shares in Montreal-based Bombardier initially rose 9 percent on Friday, after news that the company's CSeries 110-seater plane received certification from Canadian regulators. The stock, which moved nearly 14 percent higher in late morning trade, has dropped by 67 percent in the last 12 months.
Bellemare questioned the report at a Montreal area event on Friday morning. "I don't know where this is coming from," he said.
Canadian law would allow Bellemare to hold the roles of both CEO and chairman, but good governance would favour an independent chair, said Paul Gryglewicz, senior partner at Global Governance Advisors.
"In lieu of an independent chair, where the CEO is also chair, then a company is strongly advised to appoint a lead director, who is independent," he said.
If an outsider was appointed as chairman, after the surprise appointment of Bellemare as CEO in February to replace Beaudoin, it could signal that family control over the company is eroding.
"We believe the market would view the appointment of an independent chair as a positive, in terms of further improved corporate governance … and possibly signalling further independence by the CEO as it relates to the family," RBC Capital Markets analyst Walter Spracklin said in a note.
Replacing Beaudoin as chairman with another family member would send a more negative statement about his leadership of the company, the source added.
Quebec's public pension fund, the Caisse de depot et placement, may have negotiated rights for representation on the board, said one analyst, who asked not to be named. The Caisse declined to comment.
No such details were disclosed when the Caisse bought a 30 percent stake in Bombardier's rail unit for $1.5 billion (£1 billion) in November.
In a separate investment, the province agreed to inject $1 billion into the CSeries programme in late October.