The average compensation of a president or chief executive (CEO) in Brazil in 2019 was 75 times higher than the average compensation paid to employees of the companies in which they work. The average annual remuneration of a CEO was R $ 11.28 million last year, considering the companies listed on the Ibovespa, with values ranging between R $ 584 thousand and R $ 52 million.
The survey was made by the specialist in corporate governance and former director of Previ, Renato Chaves, and compares the data released by publicly traded companies and made available in the 2019 Reference Form of the Brazilian Securities Commission (CVM)
The disclosure of the minimum, maximum and average salaries of publicly-held company executives has been scheduled since 2009 – but only in 2018 did the CVM manage to overturn a court decision that prevented the autarchy from requiring all companies to disclose these numbers.
The survey shows that a CEO has remuneration equivalent to up to 663 the average paid to employees of their respective companies, as anticipated by the newspaper “Valor Econômico”. In 32 of the 71 companies analyzed, the highest salary is at least 100 times higher.
The biggest differences in the higher average salary / remuneration ratio were found in Lojas Americanas (663 times), Pão de Açúcar (649), Magazine Luiza (526), Intermédica (476) and Itaú (473). See chart below:
Ibovespa companies with the biggest salary differences – Photo: Economy G1
“It is public information that is in the CVM, but it takes a little work to look for. It is not easy. It is the highest remuneration of the board. It is the CEO that we are talking about”, says Chaves.
In order to calculate wage differences, the specialist compared the highest wages for each company with the direct compensation of employees, which is informed in the document called the Statement of Added Value (DVA).
He explains, however, that some factors that may influence the basis for comparing the numbers, such as contracting concentrated at the end of the year, since the CVM Reference Form refers to the position of the companies on December 31 and the form of the composition DVA, since some companies do not include items such as Profit Sharing and Profit Sharing (PLR) and performance bonuses in direct employee compensation.
Of the 71 companies in the survey, the smallest differences were observed at Energisa and Eletrobras, where the chief executive earns 3 times more than the average employee income. At Petrobras, the ratio was 8.2 times.
In the assessment of the person responsible for the survey, the figures reveal a “frightening” wage inequality that is higher than that found in other countries. He cites a study by PayScale that pointed to a maximum difference of 434 times in the United States and another by Bloomberg that pointed to differences 146 times in Germany and 60 times in Sweden.
“I see executive compensation in Brazil quite excessive. What I intend to show with this is that large companies are part of the problem of inequality in society that we have,” he says.
“There is no such thing as a superman. He wins a lot because the company is big, just for that. No winning strategy can be credited to a single brilliant mind,” he adds.
Higher annual remuneration at Ibovespa companies
- Itaú: R $ 52.06 million
- B3: R $ 51.25 million
- Santander: R $ 45.32 million
- CVC Brasil: R $ 37.9 million
- JBS: R $ 32.14 million
- Bradesco: R $ 30.66 million
- Cosan: R $ 27.25 million
- Cogna: R $ 22.82 million
- Magazine Luiza: R $ 21.25 million
- Braskem: R $ 21.12 million
For the president of the Brazilian Association of Publicly-Held Companies (Abrasca), Eduardo Lucano, the average remuneration of CEOs reflects “the market value of the executive’s work” and the search by shareholders for better results for the company.
“It is clear that such a large difference in remuneration also reflects the income distribution process in the broadest sense, both abroad and in Brazil. The ideal is that the differences were not so great, but this difference that exists today reflects a set values, circumstances and legal frameworks and it is a fact that stems from the demand for this workforce and the scarcity of that workforce “, he says.
He points out that the remuneration of the directors of publicly-held companies must always be informed and approved at shareholders’ meetings and explains that the salaries of the presidents tend to be almost always linked to the delivery of results related mainly to the appreciation of the company’s shares.
“The great part of the gain comes from there, it doesn’t come from fixed remuneration”, says Lucano. “If the company goes bad, he goes bad too. And if he doesn’t ‘perform’, he gets fired.”
The 5 companies with greater salary differences sought by the G1, Pão de Açúcar, Intermédica and Itaú did not comment the pushing.
As American stores affirmed, in a note, that “substantial part of the value” of the highest remuneration of the board refers to “shares of the company that become available in their entirety after 5 years”. The company also reported that it had an average of 33,234 employees throughout 2019, which leads to an average employee compensation of R $ 32,724.29, above the value of R $ 29,268.50 in the survey.
Me and Luiza stores said that most of the remuneration of the executive board is based on the appreciation of the company’s shares, “which registered one of the main returns in B3 in recent years”.
“This model, widely used by publicly traded companies around the world, is a way of aligning the remuneration of top executives with the company’s performance,” he said. “It is worth remembering that a good part of this value can only be redeemed in the long run. The plans are, on average, five years old. If the shares fall, the total also decreases”, added the company.
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