Disclosure of executive compensation is compulsory again

Brazilian listed companies will have to disclose the minimum, average and maximum compensation paid to their executives, according to a decision by the Regional Federal Appellate Court of the 2nd region (TRF-2), which responded to a reconsideration request made by the Brazilian Securities and Exchange Commission (CVM) on July 22. Amec participated in the process as Amicus Curiae of the TRF2.

This is the latest chapter of a dispute that has been taking place since 2010, when an injunction granted to the Brazilian Institute of Financial Executives (ibef-RJ) to exempt some companies from disclosing such information – which was confirmed in the judgement – was reversed in 2018. However, the institute appealed and, in May this year, it gained once again the right of not being “transparent” as to the compensation paid to the executives of listed companies.

The main arguments of the executives are their right to privacy and personal safety as the disclosure of their salaries can make them become targets of crimes, such as kidnaps, for example. Renato Vetere, Amec’s legal adviser, states that no increase in violence against executives of listed companies was reported last year based on the data available in CVM’s website. “It is essential that the companies’ shareholders and other stakeholders have access to information about the compensation and incentives paid to the executives of listed companies on a clear, complete and timely basis,” he says.

In other countries, the transparency regarding executive compensation goes beyond the disclosure of the minimum, average and maximum pays. In addition to the executives’ exact salaries, companies have to disclose the ratio between the CEO’s compensation and that of the employee that receives an average pay.