2025 Proxy Season Review: Brazil

The 2025 proxy season in Brazil reflects a market undergoing steady modernization, shaped by rising expectations from investors, regulators, and proxy advisors. Across board composition, executive pay, voting behavior, and shareholder participation, companies are increasingly required to align with global governance standards to maintain market confidence.

Board Composition and Elections

• Dominance of Slate Elections: Slates remained the primary election format (63%), though proxy advisors increasingly prefer individual elections to ensure greater accountability.
• The "ISS Effect": Boards that received a positive recommendation from ISS saw an average approval rate of 92.9%, whereas those with negative recommendations faced more resistance, particularly from international free-float investors.
• Independence Benchmarks: While Brazilian law requires 20% board independence, proxy advisors now demand at least 50% for Novo Mercado and Level 2 companies, effectively establishing a new market standard.

Executive Compensation Scrutiny

• Rising Transparency: There is a clear trend of companies improving their disclosure and narratives to justify pay practices. ISS positive recommendations for compensation rose to 54.7% in 2025, up from 50.9% in 2024.
• Pay-for-Performance: Despite improvements, negative recommendations remain common due to insufficient transparency or weak alignment between executive pay and company performance.
• Approval Gaps: Compensation proposals with a positive ISS recommendation averaged 92.6% approval, compared to 86.5% for those with a negative recommendation.

Diversity and Inclusion

• Gender Progress: Female representation on boards continues to grow gradually, particularly in the Novo Mercado segment.
• Zero-Tolerance for All-Male Boards: Proxy advisors now frequently issue negative recommendations for slates that lack female candidates. Currently, only 8% of IBrX-50 companies still have exclusively male boards, down from 11% in 2023.

Shareholder Engagement and Quorum

• The Engagement Gap: While total meeting quorum reached a high of 80.2%, the "free float" quorum (participation by minority shareholders) actually declined to 43%.
• Operational Hurdles: Lower minority participation is often attributed to the complexity of remote voting systems and tight deadlines during the peak proxy season.

Looking Ahead to 2026

For the upcoming season, mere compliance with formal requirements will no longer suffice. Investors are demanding a more explicit connection between board composition, corporate strategy, and long-term value creation. Success will require proactive communication, robust independence, and a clear commitment to diversity.