Eletrobras wants to increase executive compensation by 130% and raise the president’s salary to R$300,000

In a meeting scheduled for December, Eletrobras will propose a 130% increase in the amount allocated to the payment of salaries and bonuses to its executives, claiming that they receive less than the market average and that they will have more responsibilities.

The proposal provides for an almost five-fold increase in the salary of the company’s president, which would rise from the current R$52,335.71 to R$300,000. And it asks that the increases be retroactive to April 2022, when the last shareholders’ meeting was held.

The general amount allocated to the compensation of directors and directors would increase from R$15.4 million to R$35.9 million per year. In addition to wages and benefits, the amount includes performance bonuses, the amounts of which will depend on meeting targets.

The meeting is extraordinary, that is, it was convened only to discuss this issue. Generally, executive compensation is discussed at the annual meeting in April, when the accounts for the previous year are evaluated by shareholders.

In this case, however, the idea is to change the amounts approved in April 2022 for the remuneration for the current year, which the company argues is “inevitable” to avoid loss of talent and inability to attract new professionals.

In a document sent to the CVM (Securities and Exchange Commission) with the proposal, Eletrobras says that “the remuneration strategy is a fundamental part of the high performance culture linked to meritocracy”.

“Giving the company the appropriate inputs and tools to encourage its managers is a key part in unlocking the levers of value associated with the privatization of Eletrobras”, follows the text, signed by the chairman of the board of directors of the company, Ivan Monteiro.

Among the new challenges that would help to justify the increase, the document cites the need to operate in a new energy trading model and to sell stakes in affiliates, improvement of supply processes, modernization of assets, among others.

The text argues that Eletrobras administrators have not been readjusted since April 2015. “The remuneration gap is verified not only in terms of private players, but also in relation to the main federal state companies of equivalent size.”

The salary proposed to the president of Eletrobras, however, is equivalent to more than twice the R$ 116,000 paid by Petrobras to its president. At the BNDES (National Bank for Economic and Social Development), the president’s salary is R$80,800 per month.

“The discrepancy between the remuneration level currently practiced by Eletrobras and those adopted by private companies of equivalent size, in the same sector of activity and with a similar degree of responsibilities, complexity and challenges”, follows Eletrobras’ justification.

The new proposal also creates incentive programs such as compensation for shares, to develop “a professional culture of high performance” and for making decisions that favor long-term results, exceeding goals and creating value and sustainable growth.

It was unanimously approved by the board, which will also have their salaries increased, from R$5,440.36 to R$60,000.

“If the new remuneration model is approved, it will be possible, effectively, to adopt a new practice whose main purpose is to promote the alignment of the interests of the managers with the interests of the Company’s shareholders, as well as really enabling the attraction and retention of talent”, says the company .

In the process of privatizing Eletrobras, the government issued new shares to private investors, reducing its stake in the state-owned company to 29%. The process included a clause, known as the “poison pill”, which makes it difficult to recover the majority position.