Eletrobras wants to increase the reserve for executives by 8 times – 03/28/2023 – Market

Privatized in 2022, Eletrobras will propose to its shareholders a reserve of BRL 88.1 million for the payment of salaries and bonuses to its managers in 2023. The amount is equivalent to eight times the amount paid in its last year under control of the Union .

Of this total, R$ 64.7 million is reserved for the board, whose salaries were raised by 130% in an extraordinary meeting held in December, when the salary of the company’s president, Wilson Ferreira Junior, increased to R$ 300,000 a month.

In a statement to shareholders, the company says that the new compensation policy “aims at solidifying a meritocratic culture, capable of retaining and rewarding talent” and is structured to ensure full alignment between the interests of managers and shareholders.

Criticized by the government of Luiz Inácio Lula da Silva (PT), the privatization left the Union with 32.95% of the shares with voting rights. Even considering the 7.23% of the BNDES (National Bank for Economic and Social Development), the government does not have the votes to decide alone on the remuneration.

Of the total expected compensation for the board, there are BRL 16.4 million in salaries or pro-labore, almost four times the amount paid in 2022; R$3.7 million in bonuses, more than double the R$1.6 million in the previous year; and BRL 41 million in share-based compensation, against BRL 383 thousand in 2022.

The average number of directors at the company during the year increased from 6.33 to 10.75 between 2022 and 2023. Even so, the amounts per director are much higher. In salaries, the company expects to pay an average amount of BRL 1.5 million in 2023, against BRL 717 thousand in 2022.

The average amount reserved for variable compensation, both in cash and in shares, rises from R$324,000 to R$4.1 million per director, even with the 36% drop in net income recorded by the company in 2022.

The payment of bonuses, says the company, depends on the achievement of goals of “profitability, sustainability, excellence and generation of value in the long term, as well as the company’s triggers and challenges”.

The increase in the remuneration forecast for the company’s board of directors is even greater, from R$ 459 thousand to R$ 20.7 million. The increase occurs both in salaries (R$ 459 thousand to R$ 7 million) and in the creation of stock bonuses, which can reach R$ 11.7 million.

In a note sent to Sheetthe company says that the increase in the amount allocated to executive compensation reflects the number of months in which the new model is applied (there were three months in 2022), the increase in the number of directors and the implementation of bonus programs and options for stock purchases.

The model, he says, was supported by the consultancy Korn Ferry and is “aligned with the best market practices and compatible with the main generation and transmission companies in the country, as well as with companies of a size similar to Eletrobras, including organizations inside and outside the electric energy sector and companies that have gone through or are going through a relevant process of organizational transformation”.

The wage gap between top management and the rest of a company’s staff is a topic of debate in the ESG world and gained prominence with the crisis at Americanas, a company that has been among the most unequal in the country in recent years.

In a recent interview with Sheetmanager Fabio Alperowicth, one of the founders of Fama Investimentos, said that the imbalance in the bonus policy for short-term results could lead to decisions in their own benefit.

“There is no substantial reflection on incentive policies [no Brasil]. First, because the easiest path is not to reflect, it is to continue inertia. Second, because it is convenient for many people. As most investors are very short-term, executives are very short-term,” he said.