The Nubank board compensation agreement, which establishes payments to executives in the amount of more than BRL 800 million, provides for the fintech CEO and founder, David Vélez, to remain with the company for at least the next five years.
The information is contained in a notice to the market released this Monday (2) to “clarify incorrect and out-of-context information about the compensation of our statutory board”, according to Nubank.
According to the document, the company plans to pay BRL 804.4 million to the board during the 2022 calendar year, well above that observed among large Brazilian banks, .
Of this total, BRL 678.9 million, or 84%, refers to the CSA (Contingent Share Award) program intended for Vélez, and BRL 125.5 million, or 16%, to the remainder of the executive board’s compensation in 2022.
“The CSA is a share-based compensation program granted to our founder and CEO, David Vélez, conditioned to the achievement of ambitious goals, and which should represent practically 100% of Mr. Vélez’s total compensation over the next 5 years, period minimum that Mr. Vélez must remain in the Company to live up to the fruits of the CSA”, informs Nubank in the statement.
Also according to the document, the CSA sets challenging targets that reflect market capitalization levels that are attractive to shareholders. “In this way, the CSA creates a strong and transparent alignment of long-term interests between Mr. Vélez and our shareholders. This plan was approved by our board of directors and prepared with the support of a renowned compensation consultancy international market, which analyzed the best global market practices.”
According to the reference form, a document that companies send to B3 and the CVM (Brazilian Securities and Exchange Commission), around R$804 million will be distributed to the eight members of Nubank’s statutory board.
Another US$ 11 million will be shared by eight paid members among the nine that make up the board of directors of the digital bank created in 2013 and which today has more than 54 million customers.
The information on Nubank’s form has generated discussions on social media in recent days, as the bank, which made its debut on the New York Stock Exchange in December with a US$2.6 billion initial public offering (IPO) 13 billion)—which valued it at US$ 48 billion (R$ 240.7 billion) at the time— had a net loss of US$ 165.3 million (R$ 829.1 million) in 2021.
ambitious goals
The fintech had already said last week that it will only pay compensation to its directors this year if ambitious targets for its share price are met.
“More than 85% of Nu Holdings’ statutory board of directors’ 2022 equity compensation forecast depends on the achievement of ambitious, specific and sustained share price targets aligned with the long-term interests of our stakeholders,” the bank said. digital in a statement to Reuters.
According to the bank, this remuneration will only occur “if predetermined levels of the share price are reached, in accordance with a contingent share agreement approved by the board of directors in November and disclosed in the registration documents of the IPO process in 2021”.
The conditions for this remuneration to materialize include that the average class A common share price never falls below US$ 18.69 (R$ 93) for a period of 60 consecutive days on the market. The second condition is that the average Class A common share price is at or above US$35.30 (R$177) for a period of 60 consecutive days. Currently, Nubank’s share price is at the level of US$ 6.33 (R$ 31).
The total amount of compensation provided by Nubank to its executives is much higher than the R$185.3 million paid by the bank last year. The amount is also greater than the R$46.6 million in compensation paid to officers and directors.
See what bonuses are like at other big banks
Itaú Unibanco, the largest bank in Latin America and which at one point had a market value below that of Nubank at the time of the digital bank’s IPO, paid its managers R$444 million last year, including stock options and fixed compensation, according to your referral form. The compensation was divided among 45 members of the board of directors, statutory board and fiscal council.
Bradesco, on the other hand, paid around R$880 million in compensation to members of the board of directors and supervisory boards in 2021. The digital bank Inter paid R$26.2 million to 27 executives last year.
Also according to the Nubank form, 96% of the amounts paid to the company’s management members in 2021 came from variable compensation. This usually refers to stock options, an instrument widely used by high-growth companies to incentivize their main partners.
Nubank shares operate up 0.5% this Monday in the United States, at US$ 6.04. Since the IPO, fintech shares have fallen by about 40%.
with Reuters
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