Investors seek greater representation on boards

Starting in April, the 2024 AGM season in Brazil intensifies, and this lively period is expected to run until the end of the month. As outlined in the recent Morrow Sodali’s survey, Brazilian companies face increasing scrutiny from investors over executive compensation and board composition. Furthermore, investors want to see better representation on company boards.

In an exclusive interview with Valor, Agnes Blanco Querido, Managing Director of Morrow Sodali in Brazil, comments on the requirement for board transparency, which has greatly increased among the investors during this last period: “Accountability and the effectiveness of the boards, as well as the executive remuneration, aligned with the value creation strategies, are the most relevant topic among investors.”

Morrow Sodali monitors for updates in the policies of major proxy advisory firms like ISS and Glass Lewis. International investors, relying heavily on these firms for voting guidance, seek transparency and accountability, especially regarding compensation. The ISS demands adequate and transparent compensation proposals and board independence. Glass Lewis is increasingly attentive to the criteria related to the composition of boards and their independence, as well as the candidates’ track records. Also, the significance of climate risk assessment and transparent cybersecurity measures is of growing interest for proxy advisory firms.

Brazilian companies still require greater alignment with international practices in relation to the board's appointment process and its composition in areas such as diversity, experience, and skills, but “it is an exercise that Brazilian companies are starting to do,” comments Blanco.

Read the full interview here (in Portuguese).