Transparency in compensation disclosures in the Latin American market has been cited by BlackRock as an area in need of improvement.
In a recent vote bulletin highlighting its support of Brazilian miner Vale’s “say on pay” plan, the asset management giant said compensation-related disclosures in the region are still lagging global best practices.
In Brazil, listed companies are required to disclose the remuneration of their executives, detailing information on maximum, median, and minimum amounts of compensation.
However, BlackRock noted that compensation is often disclosed in aggregate for directors and executives rather than by individual.
As part of its voting guidelines for the region, companies are encouraged to adopt global best-in-class disclosures and operational processes that facilitate analysis and market participation from international investors.
This includes publishing shareholder meeting circulars with supporting materials approximately 30 to 45 days prior to the meeting date.
Vale was found to have taken steps to adopt global best practices in compensation disclosure. “For example, the company disclosed fixed compensation, variable compensation, and incentives across short- and long-term timelines for company executives and board members,” the bulletin noted.
BlackRock also observed that the miner’s disclosures revealed a focus on incorporating material sustainability and safety risk management metrics tied to executive awards and bonus payouts.
In March this year, Vale, one of the world’s largest producers of iron ore, pellets, and nickel, agreed to pay a fine totaling $55.9 million over allegations of falsified and misleading disclosures. The Securities and Exchange Commission (SEC) had observed that Vale’s disclosures misled investors about the safety of their dams in the years leading up to the collapse of the Brumadinho dam in 2019.
Following the Brumadinho disaster, BlackRock said it engaged to understand the steps taken by Vale to strengthen governance and risk management policies and processes to ensure the safety of people and operations.